8-K

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

     PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

      Date of Report (Date of earliest event reported): September 30, 2004
                                                        ------------------


                                  Langer, Inc.
             (Exact name of registrant as specified in its charter)

           Delaware                      0-12991                 11-2239561
- --------------------------------------------------------------------------------
(State or other jurisdiction     (Commission File Number)      (IRS Employer
      of incorporation)                                      Identification No.)


 450 Commack Road, Deer Park, New York                         11729 - 4510
- --------------------------------------------------------------------------------
(Address of principal executive offices)                        (Zip Code)


Registrant's telephone number, including area code: 631-667-1200





ITEM 1.01.   ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

On September 30, 2004, Langer, Inc., a Delaware corporation (the "Company") sold
(i) an aggregate principal amount of $5,500,000 of the Company's 7% senior
subordinated notes due September 30, 2007 (the "Subordinated Notes"), and (ii)
warrants to purchase an aggregate of 110,000 shares of the Company's common
stock (the "Warrants") pursuant to a Note and Warrant Purchase Agreement dated
September 30, 2004 (the "Financing Agreement") by and among the Company and ten
accredited investors. The Subordinated Notes are prepayable at any time without
penalty, and interest will accrue on the unpaid principal amount of the
Subordinated Notes at the rate of 7% per annum, payable semi-annually in arrears
on the last day of June and December in each year until the maturity date. The
terms of the Warrants are more fully described in Section 3.02 below.

The Company used the net proceeds from the sale of the Subordinated Notes and
Warrants to fund the payment of the cash portion of the purchase price for its
acquisition of Silipos, Inc., a Delaware corporation and for general working
capital of the Company.

The foregoing description of the Subordinated Notes, Warrants and Financing
Agreement is qualified in its entirety by the complete text of such agreements
attached as exhibits hereto.

ITEM 2.01.   COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.

On September 30, 2004, the Company acquired 100% of the outstanding capital
stock of Silipos, Inc., a Delaware corporation ("Silipos") pursuant to stock
purchase agreement (the "Stock Purchase Agreement"), dated September 22, 2004,
by and among the Company, Silipos, SSL Holdings, Inc., a Delaware corporation
("SSL"), and LRC North America, Inc., a Delaware corporation (the "Parent").
Pursuant to the Stock Purchase Agreement the Company purchased from SSL all of
the issued and outstanding shares of capital stock of Silipos for an aggregate
purchase price of $15,500,000, of which $5,000,000 was paid in cash at closing
and the balance was paid through the delivery by the Company to SSL of (i) a
$7,500,000 secured promissory note due March 31, 2006 (the "$7.5 Million Note"),
and (ii) a $3,000,000 promissory note due December 31, 2009 (the "$3 Million
Note"). Up to an aggregate of $2,500,000 of additional payments (which includes
the Protection Payment referred to below) may be made to SSL under certain
circumstances. The purchase price is subject to dollar for dollar post-closing
reduction to the extent that certain minimum tangible net worth requirements
were not met by Silipos as of the closing date. The consideration described
above was determined based upon arms-length negotiations between the parties to
the Stock Purchase Agreement.

The principal terms of the $7.5 Million Note are as follows: (i) due and payable
on March 31, 2006, subject to acceleration to March 31, 2005, if the Company
fails to take certain specified actions to implement the Protection Payment
(discussed below), (ii) if not paid in full on March 31, 2005, then the Company
will have the option of (A) increasing the face amount of the Note by $1
million, or (B) paying to Seller $500,000 in cash (collectively the "Protection
Payment"), (iii) interest will accrue at the rate of 5.5% per annum, increasing
to 7.5% on April 1, 2005, (iv) the default interest rate after March 31, 2006
will be 12% per annum, escalating 3% per annum for each additional 90 days
thereafter until the maximum rate permitted by law, (v) financial covenants
require Silipos to maintain tangible net worth of at least $4.5 million and
prohibit the Company from incurring indebtedness for borrowed money in excess of
$3.5 million for working capital and any amounts required to pay for the
purchase of Poly-Gel pursuant to the Put Option, and (vi) secured by a pledge of
Silipos' capital stock pursuant to a certain stock pledge and






agency agreement, dated September 30, 2004, by and among the Company, the Seller
and Pepper Hamilton LLP, as agent.

The principal terms of the $3 Million Note are as follows: (i) due and payable
on December 31, 2009, (ii) interest will accrue at the rate of 5.5% per annum,
increasing to 7.5% per annum on April 1, 2005, (iii) the default interest rate
after March 31, 2006 will be 11% per annum, escalating 3% per annum for each
additional 90 days thereafter until maximum permitted by law, (iv) the principal
amount shall be reduced in an amount equal to fifty percent (50%) of the amount
of the Protection Payment actually paid by the Company pursuant to the $7.5
Million Note, and (v) a default under the tangible net worth and incurrence of
debt covenants of the $7.5 Million Note will also constitute a default under the
$3 Million Note.

In addition, at closing Silipos entered into a supply agreement with SSL
International plc., an affiliate of SSL, expiring December 31, 2005, pursuant to
which Silipos will exclusively supply certain products containing mineral oil
gels to SSL International plc.

The Company funded the cash portion of the purchase price through the sale of
Company's Subordinated Notes and Warrants pursuant to the Financing Agreement as
described in Item 1.01.

Silipos, is subject to the terms and conditions of a certain supply agreement,
dated August 20, 1999, by and between Silipos and Poly-Gel, L.L.C., a New Jersey
limited liability company ("Poly-Gel"). Pursuant to the terms of such supply
agreement, Poly-Gel has the option to cause Silipos to purchase the assets or
shares of Poly-Gel (the "Put Option") at a purchase price of 1.5 times
Poly-Gel's revenues. The Put Option expires in February 2005.

The foregoing description of the Stock Purchase Agreement, $7.5 Million Note and
$3 Million Note is qualified in its entirety by the complete text of such
agreements attached as exhibits hereto.


ITEM 3.02    UNREGISTERED SALES OF EQUITY SECURITIES.

On September 30, 2004, in connection with the sale of the Subordinated Notes,
the Company issued Warrants to purchase an aggregate of 110,000 shares of the
Company's common stock to the ten accredited investors that purchased the
Subordinated Notes. The Warrants have an exercise price of $0.02 per share,
subject to adjustment under certain circumstances, and are exercisable from and
after the earlier of (i) six months after the refinancing or prepayment of the
Subordinated Notes, or (ii) September 30, 2005 until September 30, 2009.
However, the Warrants will not be exercisable until such time as the Company's
stockholders shall have approved the issuance of the Company's common stock
underlying the Warrants in satisfaction of Nasdaq Marketplace Rules. The
Warrants were issued pursuant to an exemption provided by Section 4(2) of the
Securities Act of 1933. The Company used the proceeds from the sale of the
Subordinated Notes and Warrants to fund the payment of the cash portion of the
purchase price for its acquisition of Silipos and for general working capital of
the Company.






ITEM 5.02         APPOINTMENT OF PRINCIPAL OFFICERS.

Effective as of October 1, 2004, the Company appointed Mr. W. Gray Hudkins as
Acting Chief Operating Officer. Mr. Hudkins has served as Director of Corporate
Development for Clarus Corporation since December 2002, as a Principal in
Kanders & Company since December 2003, and as Director of Corporate Development
for Net Perceptions, Inc. since April 2004. Prior to this, from February 2002
until December 2002, Mr. Hudkins served as Manager of Financial Planning and
Development for Bay Travelgear, Inc., a branded consumer products company based
in New York and Chicago. From April 2000 until February 2002, Mr. Hudkins served
as an Associate at Chartwell Investments LLC, a New York based private equity
firm, and from August 1999 until March 2000, Mr. Hudkins served as an Associate
at Saunder, Karp & Megrue, a private merchant bank based in Stamford, CT. Mr.
Hudkins graduated cum laude with an A.B. in Economics and a Certificate in
Germanic Language and Literature from Princeton University in 1997. Mr. Hudkins
is 29 years old.


ITEM 9.01.     FINANCIAL STATEMENTS AND EXHIBITS.

         (a)   Financial Statements of the Business Acquired.

                  Pursuant to paragraph (a)(4) of Item 7 of Form 8-K, the
         financial statements of Silipos required to be filed under paragraph
         (a) of this Item 7 will be filed as soon as practicable, but not later
         than the time required by Item 7 of Form 8-K.

         (b) Pro Forma Financial Information.

                  Pursuant to paragraph (a)(4) of Item 7 of Form 8-K, the pro
         forma financial information required to be filed under paragraph (b) of
         this Item 7 will be filed as soon as practicable, but not later than
         the time required by Item 7 of Form 8-K.

         (c) Exhibits.

                The following Exhibits are hereby filed as part of this Current
         Report on Form 8-K:

                Number      Exhibit
                ------      -------
                  2.1       Stock Purchase Agreement, dated as of September 22,
                            2004, by and among the Company, LRC North America,
                            Inc., SSL Holdings, Inc., and Silipos, Inc.

                  4.1       Note and Warrant Purchase Agreement, dated September
                            30, 2004, by and among the Company, and the
                            investors named therein.

                  4.2       Form of 7% Senior Subordinated Note due September
                            30, 2007.

                  4.3       Form of Warrant to purchase shares of the common
                            stock of Langer, Inc.








                  4.4       Stock Pledge and Agency Agreement, dated September
                            30, 2004, by and among the Company, SSL Holdings,
                            Inc., and Pepper Hamilton LLP.

                  4.5       $7,500,000 Secured Promissory Note due March 31,
                            2006.

                  4.6       $3,000,000 Promissory Note due December 31, 2009.

                  99.1      Press Release dated October 1, 2004.






                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.

Dated: October 06, 2004

LANGER, INC.

By:  /s/ Andrew H. Meyers
     -----------------------
     Andrew H. Meyers
     President and Chief Executive Officer














                                  Exhibit Index

Number        Exhibit
- ------        -------
  2.1         Stock Purchase Agreement, dated as of September 22, 2004, by and
              among the Company, LRC North America, Inc., SSL Holdings, Inc.,
              and Silipos, Inc.

  4.1         Note and Warrant Purchase Agreement, dated September 30, 2004, by
              and among the Company, and the investors named therein.

  4.2         Form of 7% Senior Subordinated Note due September 30, 2007.

  4.3         Form of Warrant to purchase shares of the common stock of Langer,
              Inc.

  4.4         Stock Pledge and Agency Agreement, dated September 30, 2004, by
              and among the Company, SSL Holdings, Inc., and Pepper Hamilton
              LLP.

  4.5         $7,500,000 Secured Promissory Note due March 31, 2006.

  4.6         $3,000,000 Promissory Note due December 31, 2009.

  99.1        Press Release dated October 1, 2004.

EX-2.1

                            STOCK PURCHASE AGREEMENT


                                  BY AND AMONG

                             LRC NORTH AMERICA, INC.

                                 AS THE PARENT,


                               SSL HOLDINGS, INC.

                                 AS THE SELLER,



                                  SILIPOS, INC.

                                 AS THE COMPANY



                                       AND



                                  LANGER, INC.,

                                  AS THE BUYER







                         Dated as of September 22, 2004





                                TABLE OF CONTENTS


ARTICLE 1 CERTAIN DEFINITIONS..................................................1


ARTICLE 2 SALE AND DELIVERY OF SHARES..........................................9

     2.1    Agreement to Sell and Purchase Shares..............................9
     2.2    Purchase Price....................................................10
     2.3    The Closing.......................................................10
     2.4    Certain Closing Adjustments and Covenants.........................10

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF  THE PARENT, THE SELLER AND THE
  COMPANY.....................................................................12

     3.1    Organization; Qualification; Good Standing........................12
     3.2    Authorization and Enforceability..................................12
     3.3    Capitalization and Ownership......................................13
     3.4    Consents of Governmental or Regulatory Authority and Others.......13
     3.5    Legal Proceedings; Disputes.......................................14
     3.6    FDA and Regulatory Matters........................................14
     3.7    Reimbursement/Billing.............................................16
     3.8    Compliance with Laws..............................................17
     3.9    Labor/Employee Matters............................................17
     3.10   Employee Benefit Plans............................................17
     3.11   Financial Statements..............................................18
     3.12   Real Property.....................................................19
     3.13   Personal Property.................................................19
     3.14   Material Contracts................................................20
     3.15   Insurance.........................................................21
     3.16   Environmental Matters.............................................21
     3.17   Permits...........................................................21
     3.18   Taxes and Tax Returns.............................................22
     3.19   Brokers or Finders................................................24
     3.20   Absence of Liabilities............................................24
     3.21   Intellectual Property Rights......................................24
     3.23   Products..........................................................26
     3.24   Inventory.........................................................26
     3.25   Accounts Receivable...............................................26
     3.26   Absence of Certain Business Practices.............................27
     3.27   Rights, Warrants, Options.........................................27
     3.28   Title to Securities...............................................27
     3.29   Major Customers and Suppliers; Supplies...........................28
     3.30   Charter, Bylaws and Corporate Records.............................28
     3.31   Disclosure........................................................29

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE BUYER.........................29

     4.1    Organization......................................................29
     4.2    Authorization for Agreement.......................................29
     4.3    Enforceability....................................................29

                                      -i-


     4.4    Litigation........................................................30
     4.5    Absence of Inducement.............................................30

ARTICLE 5 COVENANTS...........................................................30

     5.1    Performance of Conditions.........................................30
     5.2    Approvals.........................................................30
     5.3    Cooperation; Access to Books and Records..........................30
     5.4    Confidentiality...................................................31
     5.5    Public Announcements..............................................32
     5.6    Insurance.........................................................32
     5.7    Conduct of Business by Company....................................32
     5.8    Certain Tax Matters...............................................35
     5.9    Notification......................................................38
     5.10   Acquisition Proposals; No Solicitation............................39
     5.11   Preservation of Business..........................................39
     5.12   Certain Employee Benefit Transition Matters.......................39
     5.13   Preservation of Books and Records.................................40
     5.14   Non-competition and Non-interference..............................40
     5.15   Covenants with Respect to Company Accounts and Notes Receivable...42
     5.16   Use of Packaging Materials Containing the "SSL" Name..............42
     5.17   Compliance with Transfer Tax Requirements.........................42
     5.18   Office Space for Customer Service Employees in Oldham, England....42
     5.19   Acquisition of Poly-Gel...........................................42
     5.20   Disputes With Poly-Gel or Its Affiliates..........................43

ARTICLE 6 CONDITIONS PRECEDENT TO CLOSING.....................................44

     6.1    Conditions Precedent to the Buyer's Obligations...................44
     6.2    Conditions Precedent to the Seller's Obligations..................46

ARTICLE 7 CLOSING.............................................................47

     7.1    Obligations of the Buyer..........................................47
     7.2    Obligations of the Seller and the Parent..........................47

ARTICLE 8 INDEMNIFICATION AND SURVIVAL........................................48

     8.1    Survival..........................................................48
     8.2    Parent's and Seller's Indemnification.............................48
     8.3    Buyer's Indemnification...........................................48
     8.4    Special Indemnification...........................................49
     8.5    Payment; Procedure for Indemnification............................50
     8.6    Limitations of Indemnification....................................53
     8.7    Exclusive Remedy..................................................55

ARTICLE 9 TERMINATION AND REMEDIES............................................55

     9.1    Termination.......................................................55
     9.2    Effect of Termination.............................................56
     9.3    Claim for Breach..................................................56
     9.4    Termination for Fraud.............................................56

                                      -ii-


ARTICLE 10 MISCELLANEOUS......................................................56

     10.1   Notices...........................................................56
     10.2   No Third Party Beneficiaries......................................58
     10.3   Schedules.........................................................58
     10.4   Expenses..........................................................58
     10.5   Further Assurances................................................58
     10.6   Entire Agreement; Amendment.......................................58
     10.7   Article, Section and Paragraph Titles.............................59
     10.8   Binding Effect....................................................59
     10.9   Counterparts......................................................59
     10.10  Severability......................................................59
     10.11  Governing Law.....................................................59





                                     -iii-


                            STOCK PURCHASE AGREEMENT


         THIS STOCK PURCHASE AGREEMENT (this "Agreement") is hereby made on this
22nd day of September, 2004, by and among LRC North America, Inc., a Delaware
corporation (the "Parent"), SSL Holdings, Inc., a Delaware corporation (the
"Seller"), Silipos, Inc., a Delaware corporation (the "Company"), and Langer,
Inc., a Delaware corporation (the "Buyer"). The Parent, the Seller and the Buyer
may be referred to herein individually as a "Party" and together as the
"Parties."

                                   Background

         The Seller desires to sell to the Buyer and the Buyer desires to
purchase from the Seller all of the issued and outstanding shares of capital
stock of the Company, in accordance with the provisions of this Agreement.

                                      Terms

         IN CONSIDERATION of the foregoing and the mutual promises, covenants
and agreements contained in this Agreement, the Parties, intending to be legally
bound, hereby agree as follows:

                                   ARTICLE 1
                               CERTAIN DEFINITIONS

         As used in this Agreement, the following terms shall have the meanings
herein specified, unless the context otherwise requires:

         Additional Note shall have the meaning set forth in Section 2.2.

         Adverse Claims shall mean, with respect to any asset, any security
interests, liens, encumbrances, pledges, trusts, charges, proxies, conditional
sales, title retention agreements, and similar rights under any Contracts,
liabilities and any other burdens of any nature whatsoever attached to or
adversely affecting such asset.

         Agreement Parties shall mean the Company, the UK Company, the Buyer,
the Parent, the Seller or their respective Affiliates.

         Affiliate shall mean, with respect to any Person, directors of such
Person, officers of such Person, including with respect to the Company, Peter
Bickel and any other Person which directly or indirectly controls, is controlled
by, or is under common control with such Person. For purposes of this definition
and without limitation to the previous sentence, (x) "control" (including, with
correlative meanings, "controlling," "controlled by" or "under common control
with") means the power, direct or indirect, to direct or cause the direction of
management and policies of such Person, whether through ownership of voting
securities, by contract or otherwise, and (y) any Person owning more than ten
percent (10%) or more of the voting securities or similar interests of another
Person shall be deemed to be an Affiliate of that Person.



         Agents shall have the meaning set forth in Section 5.10.

         Audit Period shall have the meaning set forth in Section 2.4.

         Business Day shall mean any day other than a Saturday, Sunday or other
federal holiday in the United States.

         Buyer shall have the meaning set forth in the preamble.

         Buyer Companies shall have the meaning set forth in Section 5.14.

         Buyer Indemnified Parties shall have the meaning set forth in Section
5.8.

         Claim Notice shall have the meaning set forth in Section 8.5(b).

         Closing shall have the meaning set forth in Section 2.3.

         Closing Date shall mean the date on which the Closing actually takes
place.

         Closing Date Balance Sheet shall have the meaning set forth in Section
2.4.

         Code shall mean the Internal Revenue Code of 1986 and the rules and
regulations promulgated thereunder, and any successors thereto, all as amended
and supplemented from time to time.

         Companies shall mean the Company and the UK Company.

         Company shall have the meaning set forth in the preamble.

         Company Balance Sheet shall mean the Company's audited consolidated
balance sheet as of the fiscal year ended March 31, 2004.

         Company Common Stock shall mean each issued and outstanding share of
common stock, without par value per share, of the Company.

         Confidential Information shall mean, (a) with respect to any Party or
any Affiliate of such Party, all financial, technical, commercial or other
information disclosed or otherwise made available by such Party or such
Affiliate (the "Discloser") to another Party (the "Recipient") in connection
with the transactions contemplated by this Agreement, (b) the substance of the
transactions contemplated by this Agreement and (c) each of the terms,
conditions and other provisions contained in this Agreement and in the
agreements or documents to be delivered pursuant to this Agreement. Except as
set forth in the next sentence, Confidential Information shall not include any
information that (i) is in the public domain at the time of disclosure to the
Recipient or becomes part of the public domain after such disclosure through no
fault of the Recipient, (ii) is already in the lawful possession of the
Recipient at the time of disclosure to such Recipient, (iii) is disclosed to a
Recipient by any Person other than a Party to this Agreement; provided, that the
Recipient does not know that such Person is prohibited from disclosing such
information (either by reason of contractual, or legal or fiduciary duty or

                                      -2-


obligation) or (iv) is developed independently by the Recipient without the use
of any Confidential Information of the Discloser. Confidential Information of a
Discloser that is, or has been, disclosed by an Affiliate of the Discloser to a
Person that is also an Affiliate of that Person shall be, nevertheless, deemed
Confidential Information notwithstanding the exceptions set forth in the
preceding sentence.

         Company Licenses shall have the meaning set forth in Section 3.6(c).

         Competitive Business shall mean (i) the current business of the Company
and the UK Company consisting of the manufacture, promotion, marketing,
distribution and sale of products containing mineral oil based tri-block
copolymer gels or other tri-block copolymer gels of comparable composition
("Gels") in the orthopedic and skincare markets (such products, the "Gel
Products"), (ii) the manufacture, promotion, marketing, distribution and sale of
products that are improvements of Gel Products or reasonable product line
extensions of Gel Products, and (iii) the prosthetic business of the Company,
consisting of the manufacture, promotion, marketing, distribution and sale of
prosthetic liners, sleeves, interfaces and similar products, for use by
amputees.

         Consents shall mean any consents, waivers, approvals, authorizations,
certifications or exemptions from any Person or under any Contract or
Requirements of Law, as applicable.

         Contracts shall mean, with respect to any Person, any indentures,
indebtedness, contracts, leases, agreements, instruments, licenses, undertakings
and other commitments, whether written or oral, to which such Person or such
Person's properties are bound.

         Determining Accountants shall have the meaning set forth in Section
2.4.

         DGCL shall mean the General Corporation Law of the State of Delaware.

         Employee Benefit Plan shall mean any deferred compensation, pension,
profit sharing, stock option, stock purchase, savings, group insurance or
retirement plan, and all vacation pay, severance pay, incentive compensation,
consulting, bonus and other employee benefit or fringe benefit plans or
arrangements maintained by either of the Companies (including, without
limitation, health insurance, life insurance and other benefit plans maintained
for employees (including spouses, dependants, domestic partners and retirees))
or with respect to which contributions are or were made or required to be made
by either of the Companies or with respect to which either of the Companies
could reasonably be expected to have any liability and which have been made
available or offered to employees, spouses, dependants, domestic partners and
retirees.

         Encumbrance shall mean any claim, lien, charge, security interest,
pledge, mortgage, or any other similar restriction or encumbrance of any kind or
nature.

         Environmental Laws shall mean all Requirements of Law relating to
pollution or protection of the environment (including, without limitation,
ambient air, surface water, groundwater, land, or surface or subsurface strata)
including, without limitation, Requirements of Law relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants,

                                      -3-


chemicals, or industrial, toxic or Hazardous Substances into the environment and
Requirements of Law relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of any of the foregoing
including, without limitation, the Hazardous Materials Transportation Act, the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), the Clean Water Act, the
Safe Drinking Water Act, the Atomic Energy Act, the Federal Insecticide,
Fungicide, and Rodenticide Act and the Clean Air Act, and the rules and
regulations promulgated thereunder, and any successors thereto.

         ERISA shall mean the Employee Retirement Income Security Act of 1974
and the rules and regulations promulgated thereunder, and any successors
thereto.

         ERISA Affiliate shall mean any Person that is included with the Company
in a controlled group or affiliated service group under Sections 414(b), (c),
(m) or (o) of the Code.

         Excluded Costs shall mean any and all attorneys', experts' and
accountants' fees, expenses and disbursements and court costs of any of the
Seller, the Parent, the Buyer, the Company or any of their respective
Affiliates, as well as all monies paid or disbursed by the Buyer, the Company or
their Affiliates in connection with the exercise of the Put Option.

         FDC Act shall have the meaning set forth in Section 3.6.

         Final Determination shall have the meaning set forth in Section 8.5.

         Financial Statements shall have the meaning set forth in Section 3.11.

         FTC shall have the meaning set forth in Section 3.6.

         GAAP shall mean generally accepted accounting principles in the United
States, consistently applied.

         Governmental or Regulatory Authority shall mean any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the government of the United States or of any foreign country, any state or any
political subdivision of any such government (whether state, provincial, county,
city, municipal or otherwise).

         Government Programs shall have the meaning set forth in Section 3.7(a).

         Guaranty shall mean, as to any Person, all liabilities or obligations
of such Person with respect to any indebtedness or other obligations of any
other Person that have been guaranteed, directly or indirectly, in any manner by
such Person, through an agreement, contingent or otherwise, to purchase such
indebtedness or obligation, or to purchase or sell property or services,
primarily for the purpose of enabling the debtor to make payment of such
indebtedness or obligation or to guarantee the payment to the owner of such
indebtedness or obligation against loss, or to supply funds to or in any manner
invest in the debtor, or otherwise.

         Hazardous Substances shall mean (i) those substances defined in or
regulated under the following United States federal statutes and their state and
foreign counterparts, as

                                      -4-


amended, and all regulations promulgated thereunder: the Hazardous Materials
Transportation Act, the Safe Drinking Water Act, the Atomic Energy Act, the
Federal Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act; (ii)
petroleum and petroleum products, including crude oil and any fractions thereof;
and (iii) any regulated radioactive materials, hazardous or toxic substances,
wastes, or chemicals regulated by any Governmental Entity pursuant to any
Environmental Law.

         HIPAA shall have the meaning set forth in Section 3.10.

         Indemnifiable Losses shall mean all liabilities, obligations, claims,
demands, damages, penalties, settlements, causes of action, costs and expenses,
including, without limitation, the actual costs paid in connection with an
Indemnified Party's investigation and evaluation of any claim or right asserted
against such Indemnified Party and all reasonable attorneys', experts' and
accountants' fees, expenses and disbursements and court costs, but shall
specifically exclude liability for any and all special, exemplary, or
consequential damages of any Indemnified Party; provided, however, that
Indemnifiable Losses may include special, exemplary, or consequential damages
awarded to a third party (which shall specifically exclude any Indemnified
Party, and with respect to claims against (i) the Buyer and any of its
respective Affiliates or, after the Closing Date, Company, the UK Company or any
of their respective Affiliates, and (ii) the Seller, the Parent or any of their
respective Affiliates or, before the Closing Date, the Company, the UK Company
or any of their respective Affiliates) pursuant to a third party action against
an Indemnified Party, but only to the extent that such special, exemplary or
consequential damages are awarded to a third party in such third party action
and the Indemnified Party is directly liable for such special, exemplary or
consequential damages.

         Indemnified Party shall have the meaning set forth in Section 8.5(a).

         Indemnifying Party shall have the meaning set forth in Section 8.5(a).

         Indemnity Notice shall have the meaning set forth in Section 8.5(a).

         Intellectual Property shall mean any United States, foreign,
international and state (where applicable) patents and patent applications, and
continuations, reissues, divisions, or disclosures relating thereto, industrial
design registrations, inventions, certificates of invention and utility models;
trademarks, service marks, and trademark or service mark registrations and
applications, trade names, trade dress, fictitious names, assumed names, logos
and slogans, together with all goodwill related to the foregoing; Internet
domain names; copyrights, copyright registrations, renewals and applications for
copyright registrations; Software, technology, trade secrets and other
confidential information, know-how, proprietary processes, formulae, algorithms,
models and methodologies (collectively, "Trade Secrets"); rights of privacy and
publicity, including but not limited to, the names, likenesses, voices and
biographical information of real persons.

         Intellectual Property Rights shall have the meaning set forth in
Section 3.21.

         Interim Financial Statements shall have the meaning set forth in
Section 3.11.

         IRS means the Internal Revenue Service or any successor organization
thereto.

                                      -5-


         Knowledge means, with respect to any representation, warranty or
statement of the Seller contained in this Agreement, the actual knowledge of any
of the following individuals: Peter Bickel, Ven Govindarajan, John Parker,
Andrew McKelvey, Steve Schaffer, Merrill Collier, Steve Gootzeit, Marty Vogel,
Catherine Saye, Robert Kaiser (provided, however, that Robert Kaiser's inclusion
in the list of Knowledge parties shall not require any party to waive, and it
shall not be deemed that any party has waived or will waive, attorney-client or
work product privileges with respect to Robert Kaiser), Peter Broxton and Marcy
Zasucha and the knowledge that could have been obtained by any of such
individuals in the exercise of reasonable care and inquiry.

         Leased Property shall have the meaning set forth in Section 3.12.

         Legal Proceeding shall mean any action, suit, arbitration, claim or
investigation by or before any Governmental or Regulatory Authority, any
arbitration or alternative dispute resolution panel, or any other legal,
administrative or other proceeding.

         Liabilities shall have the meaning set forth in Section 3.20.

         Major Suppliers shall have the meaning set forth in Section 3.29.

         Material Adverse Effect shall mean any change, effect, circumstance or
event that taken together with any and all other acts, omissions, changes and
events which breach or violate any representation or warranty or covenant in
this Agreement and which has had or would reasonably be expected to have a
materially adverse effect on the business, condition (financial or otherwise),
results of operations, assets and properties of the Company in the aggregate;
provided, however, that Material Adverse Effect shall not include any Poly-Gel
Claim, the costs of discovery in connection with such claims, litigation of such
claims, any judgment or settlement of or in connection with such claims, or any
payment to be made with respect to such claims, judgment or settlement.

         Material Contracts shall have the meaning set forth in Section 3.14.

         Medicare shall have the meaning set forth in Section 3.7(a).

         Minimum Tangible Net Worth shall have the meaning set forth in Section
2.4.

         Note shall have the meaning set forth in Section 2.2.

         NY Facility shall mean the Company's facility located at 366 Madison
Avenue, New York, New York.

         Order shall mean any judgment, order, writ, decree, injunction or other
determination whatsoever of any Governmental or Regulatory Authority or any
other entity or body whose finding, ruling or holding is legally binding or is
enforceable as a matter of right (in any case, whether preliminary or final).

         Parent shall have the meaning set forth in the preamble.

                                      -6-


         Pension Plans shall have the meaning set forth in Section 5.12.

         Permits shall mean all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises, rights, orders,
qualifications and similar rights or approvals granted or issued by any
Governmental or Regulatory Authority relating to the Company's business and
operations.

         Person shall mean any natural person, corporation, general partnership,
limited partnership, limited liability company, proprietorship, joint venture,
trust, association, union, entity, or other form of business organization or any
Governmental or Regulatory Authority whatsoever.

         Pledge Agreement shall have the meaning set forth in Section 6.2(i)

         Poly-Gel shall mean Poly-Gel, L.L.C., a New Jersey limited liability
company.

         Poly-Gel Claims shall mean any claim or action against any or all of
the Agreement Parties brought by a Poly-Gel Party, arising out of or in
connection with (i) the acquisition by the Buyer of the Company; (ii) the
Poly-Gel Supply Agreement (excluding obligations pursuant to the Put Option);
(iii) the manufacture, marketing or sale of products made from gel not purchased
from Poly-Gel; (iv) any allegation that any of the Agreement Parties has taken
trade secrets or other confidential information (including gel formulations) of
Poly-Gel; (vi) any breach of any express or implied obligation of any Agreement
Party to a Poly-Gel Party or claim that the Agreement Parties or any or them
took or failed to take any action due or owing to a Poly-Gel Party or any of
them or commences an action against any Agreement Party.

         Poly-Gel Party shall mean Poly-Gel, Gel Concepts, LLC, a New Jersey
limited liability company, or, solely in their capacity as such, any, officer,
director, member or manager thereof.

         Poly-Gel Supply Agreement shall mean that certain Supply Agreement
dated as of August 20, 1999 by and between the Company and Poly-Gel.

         Post-Closing Settlement shall have the meaning set forth in Section
2.4.

         Principal Sum shall have the meaning set forth in Section 2.2.

         Product shall have the meaning set forth in Section 3.23.

         Public Statement shall have the meaning set forth in Section 5.5.

         Purchase Amount shall have the meaning set forth in Section 2.2.

         Purchase Price shall have the meaning set forth in Section 2.2.

         Put Option shall mean the rights and obligations set forth in Section
10(b) of the Poly-Gel Supply Agreement.

                                      -7-


         Real Property shall mean all real property leased to the Company.

         Record Retention Period shall have the meaning set forth in Section
5.13.

         Regulatory Approvals shall mean all Consents from all Governmental or
Regulatory Authorities.

         Release shall have the meaning set forth in Section 6.1.

         Review Period shall have the meaning set forth in Section 2.4.

         Requirements of Law shall mean, with respect to any Person, such
Person's articles or certificate of incorporation, formation documents, by-laws,
trust agreements, or other governing or constitutive documents, if any, and any
provision of law, statute, treaty, rule, regulation, ordinance or pronouncement
having the effect of law, whether foreign, federal, state or local, in effect on
the date of this Agreement or on the Closing Date or any Order, whether foreign,
federal, state or local to which, in each case, such Person or any of such
Person's properties, operations, business or assets is bound or subject.
Requirements of Law includes, without limitation, Environmental Laws, and state
and local zoning and building laws.

         Right of Set-Off shall have the meaning set forth in Section 8.5(g).

         Securities Act shall mean the Securities Act of 1933 and the rules and
regulations promulgated thereunder, and any successors thereto, all as amended
and supplemented from time to time.

         Seller shall have the meaning set forth in the preamble.

         Seller's Closing Tax Returns shall have the meaning set forth in
Section 5.8.

         Seller's Taxes shall have the meaning set forth in Section 5.8(d).

         Shares shall have the meaning set forth in Section 2.1.

         Straddle Returns shall have the meaning set forth in Section 5.8.

         Statement of Tangible Net Worth shall have the meaning set forth in
Section 2.4(b).

         Subsidiary shall mean, with respect to any Person, any Person of which
securities or other ownership interests having ordinary voting power to select a
majority of the board of directors or other persons serving similar functions
are at the time directly or indirectly owned by such Person.

         Supply Agreement shall have the meaning set forth in Section 6.2(g).

         Survival Period shall have the meaning set forth in Section 8.1.

                                      -8-


         Tangible Net Worth shall mean an amount calculated in the manner set
forth on Exhibit 1, all as determined in accordance with GAAP consistently
applied on a historical basis except that any liability, contingent or
otherwise, matured or unmatured, with respect to the Put Option or the Poly-Gel
Claims shall not be included in such calculation.

         Target Date shall have the meaning set forth in Section 2.3.

         Tax or Taxes shall mean any tax, charge, fee, levy or other assessment
including, without limitation, any net income, alternative minimum tax, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
payroll, employment, social security, unemployment, workers compensation, net
worth, withholding, FICA, FVTA, value added, gains tax, customs' duties, excise,
estimated, stamp, occupancy, occupation, property or other similar taxes,
including any interest or penalties thereon, and additions to tax or additional
amounts imposed by a Taxing Authority.

         Taxing Authority shall mean any federal, state, local or foreign
governmental authority, domestic or foreign, which imposes Taxes.

         Tax Notification Periods shall have the meaning set forth in Section
5.8(i).

         Tax Returns shall mean any declaration, return, report, estimate,
information return, schedule, statements or other document, including any
amendment thereof, filed or required to be filed with or, when none is required
to be filed with a Taxing Authority, the statement or other document issued by,
a Taxing Authority. Terminating Party shall have the meaning set forth in
Section 9.3.

         Transferred Employees shall mean employees of the Companies on the day
before the Closing Date who become, as of the Closing Date, employees of the
Buyer.

         Transaction Documents shall mean this Agreement, the Note, the
Additional Note, the Pledge Agreement, the Supply Agreement, the Release and the
documents, certificates, stock powers and other deliveries of the Parties
contemplated herein.

         UK Company shall mean Silipos (UK) Ltd., a company organized under the
laws of England.

         UK Shares shall have the meaning set forth in Section 3.3.

         WARN shall have the meaning set forth in Section 5.12.

         Year End Financial Statements shall have the meaning set forth in
Section 3.11.

                                   ARTICLE 2
                           SALE AND DELIVERY OF SHARES

         2.1 Agreement to Sell and Purchase Shares. Subject to the terms and
conditions set forth herein, on the Closing Date, the Seller shall sell to the
Buyer, and the Buyer shall

                                      -9-


purchase from the Seller, all of the Seller's right, title and interest in and
to one hundred percent (100%) of the issued and outstanding capital stock of the
Company held by the Seller (collectively, the "Shares"). At the Closing, the
Seller shall deliver to the Buyer all of the certificates representing the
Shares together with stock powers separate from the certificates duly executed
by the Seller in blank and sufficient to convey to the Buyer good and marketable
title to all of the Shares free and clear of any and all claims, liens, charges,
security interests, pledges or encumbrances of any nature whatsoever and
together with all accrued benefits and rights attaching thereto.

         2.2 Purchase Price.

                  (a) Subject to adjustment as set forth in Section 2.4, the
total purchase price to be paid by the Buyer for the Shares shall be Fifteen
Million Five Hundred Thousand U.S. Dollars ($15,500,000) (the "Purchase Price"),
consisting of (i) $5,000,000 in cash (the "Cash Consideration") which shall be
paid by the Buyer to the Seller on the Closing Date by wire transfer of
immediately available funds to such account(s) as shall be designated by the
Seller prior to the Closing Date, (ii) a 5.5% Promissory Note in the aggregate
principal amount of Seven Million Five Hundred Thousand U.S. Dollars
($7,500,000) (the "Principal Sum"), in the form attached hereto as Exhibit 2.2
(the "Note"), which shall be issued by the Buyer and delivered to the Seller on
the Closing Date, and (iii) a 5.5% Promissory Note in the aggregate principal
amount of Three Million U.S. Dollars ($3,000,000), in the form attached hereto
as Exhibit 2.2 (the "Additional Note"), which shall be issued by the Buyer and
delivered to the Seller on the Closing Date. Each of the Note and the Additional
Note shall be transferable among the Seller's and the Parent's respective
Affiliates pursuant to their respective terms.

                  (b) Upon a reduction in the Principal Sum as provided in the
Note in connection with either (x) any reduction in the Purchase Price pursuant
to Section 2.4 or (y) the satisfaction of any indemnification claim made by the
Buyer against the Parent or the Seller for Indemnifiable Losses by means of a
reduction in the Principal Sum of the Note pursuant to Section 8.5(g), the
parties shall execute a new Note or Notes in substitution of the then
outstanding Note(s) (which outstanding Note(s) shall be deemed cancelled) having
an aggregate principal amount equal to the Principal Sum as so reduced (the
"Principal Amount"). In all other respects the substituted Note(s) shall be
identical to the previously outstanding Note(s) and shall carry the same rights
to accrued and unpaid interest that were carried by the previously outstanding
Note(s).

         2.3 The Closing. The purchase and sale of the Shares under this
Agreement (the "Closing") shall occur at 10:00 a.m., local time, at the offices
of Kane Kessler, P.C., 1350 Avenue of the Americas, New York, New York 10019, or
at such other place as shall be mutually agreed by the Parties, on a date (the
"Target Date") which is as soon as practicable after the conditions to Closing
set forth in Article 6 of this Agreement have been satisfied, which will be on
or prior to September 30, 2004; provided however, that if the Closing does not
occur on or prior to September 30, 2004, the Target Date may be unilaterally
extended by the Seller until October 30, 2004.

         2.4 Certain Closing Adjustments and Covenants.

                                      -10-


                  (a) The Purchase Price shall be decreased dollar for dollar to
the extent that Tangible Net Worth, as set forth on the Statement of Tangible
Net Worth, is less than $5,000,000 (the "Minimum Tangible Net Worth") on the
Closing Date, as finally determined pursuant to this Section 2.4.

                  (b) For purposes of calculating the Tangible Net Worth, the
Buyer shall cause its independent accountants to conduct an audit of the balance
sheet of the Company as of the Closing Date and to prepare and deliver to the
Seller within seventy-five (75) days after the Closing Date (the "Audit
Period"), (i) the audited consolidated balance sheet of the Company as of the
Closing Date (the "Closing Date Balance Sheet") and (ii) a calculation of
Tangible Net Worth as derived from the Closing Balance Sheet in the form of the
Statement of Tangible Net Worth attached hereto as Exhibit 1 (the "Statement of
Tangible Net Worth"). The Closing Date Balance Sheet shall be prepared in
accordance with GAAP, using the same accounting practices, policies and
assumptions as were reasonably used by the Company in the preparation of the
Company Balance Sheet, except that no effect shall be given to any purchase
accounting or other changes and adjustments resulting from the consummation of
the transactions contemplated by this Agreement. If the Buyer fails to deliver
the Closing Balance Sheet and completed Statement of Tangible Net Worth to the
Seller on or before 5:00 p.m., local New York City time, on the last day of the
Audit Period, then Tangible Net Worth as of the Closing Date shall, for purposes
of Section 2.4(a), be deemed to equal the Minimum Tangible Net Worth. During the
thirty (30) day period immediately following the Seller's receipt of the Closing
Balance Sheet and completed Statement of Tangible Net Worth (the "Review
Period"), the Seller and the Company and their respective accountants shall be
afforded access to any workpapers, trial balances and other materials of the
Buyer and its accountants in connection with the preparation of the Closing Date
Balance Sheet and completed Statement of Tangible Net Worth. The Closing Date
Balance Sheet and completed Statement of Tangible Net Worth as so delivered to
the Seller, shall become final and binding upon the parties unless, on or before
5:00 p.m., local New York City time, on the last day of the Review Period,
notice is given by the Seller to the Buyer of the Seller's dispute of either or
both of the Closing Date Balance Sheet and the Statement of Tangible Net Worth,
setting forth in reasonable detail the Seller's basis for such objection.
Notwithstanding the foregoing, if the last day of either of the Audit Period or
the Review Period is not a Business Day, then, for the purposes of this Section
2.4(b), the last day of the Audit Period or Review Period, as applicable, shall
be the next succeeding Business Day. If notice of dispute is timely given by the
Seller, the parties shall work together in good faith to resolve such dispute,
but shall have no liability to one another for failing to resolve the dispute.

                  (c) If the parties are unable to reach agreement within 30
days after notice of dispute has been received by the Buyer, the dispute shall
be referred for resolution to a "big-four" accounting firm that has not had a
previous material relationship with the Parent, the Seller, the Buyer or the
Company (the "Determining Accountants") as promptly as practicable. Each of the
Buyer and the Seller shall execute, if required by the Determining Accountants,
an engagement letter containing reasonable and customary terms. The Determining
Accountants will make a determination as to each item in dispute, which
determination will be (i) in writing, (ii) furnished to the Seller and the Buyer
as promptly as practicable after the items in dispute have been referred to the
Determining Accountants, (iii) made in accordance with this Agreement, and (iv)
conclusive and binding upon each party hereto. Each of the Buyer and the Seller
will use reasonable efforts to cause the Determining Accountants to render their
decision

                                      -11-


as soon as reasonably practicable, including without limitation by promptly
complying with all reasonable requests by the Determining Accountants for
information, books, records and similar items. The Buyer and the Seller shall
pay their own costs and expenses incurred under this Section 2.4(c). The fees
and expenses of the Determining Accountants incurred in connection with its
review and determination shall be borne one-half by the Buyer and one-half by
the Seller.

                  (d) If any post-closing adjustment or other set-off is
required or permitted to be made pursuant hereto, the settlement thereof (the
"Post-Closing Settlement") shall take place at the offices of Kane Kessler,
P.C., 1350 Avenue of the Americas, New York, NY 10019 at 10:00 a.m. local time
on the fifth business day following the end of the Review Period, or in the
event such matter has been referred to the Determining Accountants, on the fifth
Business Day following the date upon which the written determination of the
Determining Accountants become final and binding upon the parties, or at such
other time and place as the Buyer and the Seller may mutually agree in writing.
Any decrease in the Purchase Price pursuant to this Section 2.4 up to $3,000,000
shall be satisfied by decreasing the Principal Sum of the Note by the amount of
such decrease to the Purchase Price, in accordance with the terms of the Note.

                                   ARTICLE 3
                        REPRESENTATIONS AND WARRANTIES OF
                     THE PARENT, THE SELLER AND THE COMPANY

         The Parent, the Seller and the Company hereby jointly and individually
represent and warrant to the Buyer as follows:

         3.1 Organization; Qualification; Good Standing. Each of the Companies
is a corporation duly incorporated, validly existing and in good standing (or
applicable concept) under the laws of the jurisdiction of its incorporation or
formation and has the requisite corporate power and authority to carry on its
business as now being conducted. Each of the Companies is duly qualified or
licensed to do business and is in good standing (or applicable concept) in each
jurisdiction in which the nature of its business or the ownership, leasing,
licensing, exploitation or operation of its assets makes such qualification or
licensing necessary, except for those jurisdictions where the failure to be so
qualified or licensed or to be in good standing, individually or in the
aggregate, would not have a Material Adverse Effect on the Company.

         3.2 Authorization and Enforceability. The execution, delivery and
performance of this Agreement and the Transaction Documents and the consummation
of the transactions contemplated hereby and thereby: (a) do not require any
action on the part of each of Parent, the Seller, the Company or the UK Company
by or in respect of, or filing with, any Governmental or Regulatory Authority;
(b) do not contravene, violate or constitute a material breach or default under
any Requirements of Law applicable to each of the Companies or any of their
respective properties or respective certificates of incorporation or bylaws, and
(c) do not pursuant to the term hereof, with or without the passage of time or
the giving of notice, except as set forth on Schedule 3.2 (i) result in the
material breach of, constitute a material default under, or give rise to a right
of termination, cancellation, or acceleration of performance or loss of material
benefit under, or in any way materially and adversely affect the validity or
effectiveness of, any Contract

                                      -12-


to which either of the Companies are a party or by which either of the Companies
or their respective properties are bound or (ii) result in the creation of any
Encumbrance upon any property or assets of either of the Companies pursuant to
any Contract to which either of the Companies is a party or by which either of
the Companies or their respective properties are bound. Each of the Parent, the
Seller and the Company has all requisite corporate power and authority to enter
into this Agreement and the Transaction Documents and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Transaction Documents by each of the Parent, the Seller and
the Company and the consummation by each of the Parent, the Seller and the
Company of the transactions contemplated hereby have been duly authorized by
each of their respective Board of Directors and stockholders, which approvals
constitute all necessary corporate action on the part of each of the Parent, the
Seller and the Company and no further action on the part of such Parties is
necessary. This Agreement has been, and upon the execution and delivery hereof
at the Closing, and the Transaction Documents will be, duly executed and
delivered by the Parent, the Seller and/or the Company, as the case may be, and
constitutes the legal, valid and binding obligation of the Parent, the Seller
and the Company, as the case may be, enforceable against it in accordance with
its terms, except to the extent that (i) enforcement may be limited by or
subject to any bankruptcy, insolvency, reorganization, moratorium, or similar
law as is now or hereinafter in effect relating to creditors' rights generally,
and (ii) the remedy of specific performance and injunctive and other forms of
relief are subject to certain equitable defenses and to the discretion of the
court or other authority or person before which any proceeding therefor may be
brought.

         3.3 Capitalization and Ownership. The total authorized capital stock of
the Company consists of 2,000 shares of Company Common Stock, of which 1,000
shares are classified as Class A Common Stock and 1,000 shares are classified as
Class B Common Stock. There are 300 shares of Class A Common Stock and 15 shares
of Class B Common Stock issued and outstanding. The total authorized capital
stock of the UK Company consists of 100 shares, all of which are issued and
outstanding (the "UK Shares"). The Shares and the UK Shares are duly authorized,
validly issued, fully paid and non-assessable. There are no existing agreements,
subscriptions, options, warrants, calls, commitments, conversion rights or other
rights of any character to purchase or otherwise acquire from either the Seller
or the Company at any time, or upon the happening of any event, any of the
Shares or the UK Shares other than this Agreement. No securities issued by
Company between August 20, 1999 until the date hereof were issued in violation
of any statutory or common law preemptive rights. All Taxes required to be paid
in connection with the issuance and any transfers of the Shares and the UK
Shares have been paid. Except for the UK Company, the Company does not own or
control, directly or indirectly, any debt, equity or other financial or
ownership interest in any other person or entity. The UK Company does not own or
control, directly or indirectly, any debt, equity or other financial or
ownership interest in any other person or entity.

         3.4 Consents of Governmental or Regulatory Authority and Others. Except
as disclosed on Schedule 3.4 hereto, no Regulatory Approvals or consent,
approval or authorization of any other Person, is required to be made by the
Parent, the Seller and/or either of the Companies in connection with the
execution, delivery or performance of this Agreement or the Transaction
Documents by the Parent, the Seller and/or either of the Companies or the

                                      -13-


consummation by the Parent, the Seller and/or either of the Companies of the
transactions contemplated hereby.

         3.5 Legal Proceedings; Disputes. There are no Orders outstanding
against either of the Companies. In addition, Schedule 3.5 attached to this
Agreement completely and accurately lists and fully describes (i) each pending,
and, to the Seller's Knowledge, threatened, Legal Proceeding that has been
commenced, brought, asserted, or threatened by (A) either of the Companies
against any Person or (B) any Person against either of the Companies, and (ii)
all other material Legal Proceedings that have been commenced against either of
the Companies since August 20, 1999. Except as set forth on Schedule 3.5, to the
Knowledge of the Seller, none of the Seller or any of its Affiliates has any
claim, whether arising in tort contract or otherwise, against either of the
Companies or either of the Companies' present directors, officers, employees,
consultants or agents.

         3.6 FDA and Regulatory Matters.

                  (a) Neither of the Companies are in default in any material
respect under (i) any applicable law or regulation, or (ii) any order of any
court or federal, state, municipal or other governmental department, commission,
board, bureau, agency, or instrumentality having jurisdiction over it. Since
August 20, 1999, each of the Companies has conducted and is conducting its
business in substantial compliance with all applicable federal, state, and local
statutes, ordinances, permits, licenses, orders, approvals, variances, rules and
regulations and is not in violation of any of the foregoing, except where the
failure to comply would not, individually or in the aggregate, have a Material
Adverse Effect.

                  (b) Without limiting the generality of subSection 3.6(a),
since August 20, 1999, the Company has not violated or is in violation of any
provision of (i) the Federal Food, Drug, and Cosmetic ("FDC Act"), (ii) the
regulations and requirements adopted by the FDA pursuant to the FDC Act, (iii)
applicable state and local laws or requirements, and (iv) the laws, regulations,
and requirements of the Federal Trade Commission ("FTC") as they relate to the
labeling, advertising, and promotion of the Company's Products, except in each
case where the failure to comply would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. To the Knowledge of
the Company, the Company's Products in process or in inventory are not, and all
Company's Products manufactured, labeled, sold, or distributed by the Company at
the time of delivery to the customers were not, "adulterated" or "misbranded"
within the meaning of said laws, nor does any such product constitute an article
prohibited from introduction into interstate commerce under the FDC Act at the
time of such delivery.

                  (c) The Company has obtained all necessary and applicable
approvals, clearances, authorizations, licenses and registrations required by
federal, state and local laws, regulations and requirements, to permit the
design, development, pre-clinical and clinical testing, manufacture, labeling,
sale, distribution and promotion of its products in the United States with
respect to each product (collectively, the "Company Licenses"). The Company is
in compliance in all material respects with the terms and conditions of each
Company License. The Company is in compliance in all material respects with all
applicable Requirements of Law regarding registration, listing, packaging,
labeling, advertising and certification for each product and site at

                                      -14-


which a product is manufactured, labeled, sold, or distributed. Schedule 3.6(a)
sets forth a list of all Company Licenses.

                  (d) To the extent any product manufactured in the United
States has been exported to a foreign country, the Company has exported such
product in compliance in all material respects with applicable United States
federal, state and local laws, regulations and requirements. To the extent that
the Company manufactures, sells, markets, or distributes products in foreign
countries, the Company is in compliance in all material respects with the laws
and requirements of the foreign countries in which it sells, markets, and/or
distributes products and is not in violation of any applicable provisions of
foreign law relating to the Company' s business or the manufacture, storage,
distribution, certification, labeling, advertising, promotion, or marketing of
the Company's Products. To the extent that any product is manufactured outside
of the United States and is imported into the United States, all such imported
products meet federal, state, and local laws, regulations, and requirements.

                  (e) Since August 20, 1999, all manufacturing operations
performed by the Company in the United States and outside of the United States
have been and are being conducted in all material respects in compliance with
current good manufacturing practices and FDA's medical device Quality Systems
regulations. Since August 20, 1999, the Company has and does adhere to all
testing, quality control and documentation requirements.

                  (f) All non-clinical laboratory studies of products sponsored
by the Company and intended to be used to support regulatory clearance or
approval, have been and are being conducted in compliance in all material
respects with the FDA's good Laboratory Practice for Non-Clinical Studies
regulations (21 CFR Part 58) in the United States, to the extent applicable. To
the extent the Company sponsored or sponsors clinical studies for use to support
regulatory clearance or approval, they have been and are being conducted in
compliance in all material respects with applicable FDA investigational device
exemption requirements (21 CFR Part 812) and the informed consent and
institutional review board requirements (21 CFR Parts 50 and 56).

                  (g) The Company is in compliance in all material respects with
all federal, state and local laws, regulations and requirements relating to the
maintenance, compilation and filing of records and reports, including complaints
and medical device adverse event reports, with regard to the Company's Products
and the Company's compliance with good manufacturing practices. Schedule
3.6(g)(i) sets forth a list of all applicable adverse event reports related to
the Company's Products, including any Medical Device Reports (as defined in 21
CFR 803). Schedule 3.6(g)(ii) sets forth a list of all complaint review and
analysis reports of the Company including information regarding complaints by
product and root cause analysis of closed complaints, which are correct in all
material respects.

                  (h) Since August 20, 1999, the Company has not received any
written notice or other written communication from any federal, state, local or
foreign Governmental or Regulatory Authority or otherwise become aware of any
Requirements of Law (i) contesting the safety of, the pre-market clearance or
approval of, the uses of or the labeling and promotion of any of the Company's
products; or (ii) otherwise alleging any violation of Requirements of Law by the
Company, in either case, which has not been resolved or cured.

                                      -15-


                  (i) Except as set forth on Schedule 3.6(i), since August 20,
1999, there have been no recalls, field notifications or seizures ordered or
adverse regulatory actions taken or, to the Seller's Knowledge, threatened by
any Governmental or Regulatory Authority or any Requirements of Law with respect
to any of the Company's products, including any facilities where any such
products are produced, processed, packaged or stored, and the Company has not
within the last three years, either voluntarily or at the request of any
Governmental or Regulatory Authority, initiated or participated in a recall of
any product or provided post-sale warnings regarding any product. The Company
has conducted all of their clinical trials with reasonable care and in all
material respects in accordance with all Requirements of Law and the stated
protocols for such clinical trials. All filings with and submissions to any
Governmental or Regulatory Authority made by the Company with regard to the
Company's products, whether oral, written or electronically delivered, were
true, accurate and complete in all material respects as of the date made, and,
to the extent required to be updated, as so updated remain true, accurate and
complete in all material respects as of the date hereof, and do not materially
misstate any of the statements or information included therein, or omit to state
a material fact necessary to make the statements therein not misleading.

         3.7 Reimbursement/Billing.

                  (a) The Company's products identified on Schedule 3.7(a)
attached to this Agreement may be reimbursed by Medicare (Title XVIII of the
Social Security Act ("Medicare"). Notwithstanding the foregoing, the Company
represents that it does not participate, and it has never participated in,
Medicare, Medicaid or any other government-sponsored health care program
(collectively, "Government Programs"), and it does not bill, and it has never
billed, any Government Program for the Products, directly or indirectly.

                  (b) There is no pending, nor to the Knowledge of the Seller,
threatened, proceeding or investigation under any Government Program involving
the Company. To the Seller's Knowledge, the Company's sales and marketing
practices are, and have been, in compliance in all material respects with all
Requirements of Law and all policies of applicable Government Programs.

                  (c) None of the officers, directors or managing employees (as
such term is defined in 42 U.S.C. ss. 1320a-5(b)) of the Company, has been
excluded from participating in any Government Program or been subject to
sanction pursuant to 42 U.S.C. ss. 1320a-7a or 1320a-8 or been convicted of a
crime described at 42 U.S.C. ss. 1320a-7b.

                  (d) Except as set forth on Schedule 3.7(d), the Company has
not, and to the Seller's Knowledge, no director, officer or employee of the
Company, has directly or indirectly in connection with the Company: (i) offered
or paid any remuneration, in cash or in kind, to or made any financial
arrangements with, any past, present or potential customers, past or present
suppliers, patients, contractors or employees of Government Programs in order to
obtain business or payments from such persons other than in the ordinary course
of business; (ii) given or agreed to give, any gift or gratuitous payment of any
kind, nature or description (whether in money, property or services) to any
customer or potential customer, supplier or potential supplier, contractor or
any other person other than in connection with promotional or entertainment
activities in the ordinary course of business in compliance with the Company's

                                      -16-


compliance program; or (iii) made any false entries on any of the Company's
books or records for any purpose prohibited by Requirements of Law.

                  (e) The Company is not, and to the Seller's Knowledge, no
director, officer or employee of the Company is, a party to any contract to
provide services, lease space or lease equipment to the Company with any
physician, health care facility, hospital or other person who is in a position
to make or influence referrals to the Company where such contract or provision
of services or space is prohibited by applicable Requirements of Law.

         3.8 Compliance with Laws. To the Seller's Knowledge, none of the
Companies have violated or infringed in any material respect nor is it in
violation or infringement of, any Requirements of Law or any Order in connection
with its activities. To the Seller's Knowledge, each of the Companies and each
of their respective officers, directors and employees have complied with all
Requirements of Law in all material respects, including, but not limited to,
Requirements of Law relating to Government Programs and to billing and health
care fraud (including the federal Anti-Kickback Law, 42 U.S.C. ss.1320a-7b, the
Stark I and II Laws, 42 U.S.C. ss.1395nn, as amended, and the False Claims Act,
31 U.S.C. ss.3729 et seq. and any regulations related thereto, as well as with
any applicable similar state statutes). Except as set forth on Schedule 3.8,
since August 20, 1999, no claims have been filed against either of the Companies
alleging a violation of any Requirements of Law.

         3.9 Labor/Employee Matters.

                  (a) Attached to this Agreement as Schedule 3.9(a) is a
complete and accurate list of all employment or similar Contracts to which
either of the Companies is a party, and the compensation to which each employee
is entitled under its respective Contract. Since January 1, 2004, the Company
has not increased the compensation payable to its employees or the rate of
compensation payable to its employees other than in the ordinary course of
business.

                  (b) To the Seller's Knowledge, there are no threatened or
contemplated attempts to organize for collective bargaining purposes any of the
employees of the Companies. Neither of the Companies are a party to or bound by
any collective bargaining agreement or similar Contract and no collective
bargaining agreement or similar Contract covering any of such employees is
currently being negotiated.

                  (c) There is no, and there has been no, work stoppage, strike,
slowdown, picketing or other labor disturbance or controversy by or with respect
to any of the employees of either of the Companies since January 1, 2004. In
addition, except as set forth on Schedule 3.9(c) attached to this Agreement,
since January 1, 2004, to the Seller's Knowledge, there is no material claim or
petition pending before, and at no time has there been, any claim or petition
made to, any Governmental or Regulatory Authority against either of the
Companies.

        3.10 Employee Benefit Plans.

                  (a) Schedule 3.10(a) attached to this Agreement lists each
Employee Benefit Plan. With respect to each Employee Benefit Plan, the Seller or
the Company have made available to the Buyer true and complete copies of (i) the
plan document, trust agreement and any other document governing such Employee
Benefit Plan, (ii) the summary plan description,

                                      -17-


(iii) all Form 5500 annual reports and attachments, and (iv) the most recent IRS
determination letter, if any, for such plan.

                  (b) Each of the Employee Benefit Plans (including any plans
terminated or merged within the past six years and not listed on Schedule
3.10(a)) has been maintained, operated and administered (and in the case of
terminated or merged plans, so terminated or merged) in material compliance with
its respective terms and all applicable Requirements of Law including, without
limitation, ERISA and the Code. There are no liens outstanding against any
Employee Benefit Plan. The Company has materially complied with the reporting
and disclosure requirements of ERISA applicable to the Employee Benefit Plans
and the continuation coverage requirements of the Code and ERISA applicable to
any of the Employee Benefit Plans.

                  (c) Neither the Company nor any ERISA Affiliate has ever
sponsored, maintained or contributed to, or been obligated to contribute to, any
Employee Benefit Plan subject to Title IV of ERISA or the minimum funding
requirements of Code Section 412 or any "Multiemployer Plan" within the meaning
of Section 3(37) of ERISA or any collectively bargained pension or welfare plan.

                  (d) There has been no "prohibited transaction" or "reportable
event" within the meaning of the Code or ERISA within the last sixty (60)
months, or breach of fiduciary duty with respect to any of the Employee Benefit
Plans that could subject the Buyer or the Company to any Tax, penalty or other
liability under the Code or ERISA, and, to the Seller's Knowledge, no Person
acting on behalf of the Company has engaged in any conduct in respect of any
Employee Benefit Plan that may result in any excise tax under Sections 4791
through 4980B, inclusive, of the Code, nor has any civil or criminal action been
brought pursuant to Part 5 of Title I of ERISA.

                  (e) The Seller and the Company are in compliance with the
applicable requirements of the Health Insurance Portability and Accountability
Act ("HIPAA").

                  (f) With respect to the Seller's Pension Plans (as defined in
Section 5.13 of this Agreement) Seller warrants and represents that: (i) for the
Plan Year ending December 31, 2003, and for each of the preceding five Plan
Years, neither the Seller nor any ERISA Affiliate of Seller has made any
discretionary contributions (including discretionary matching contributions) to
the accounts of participants in such Pension Plans; and (ii) neither Seller nor
any ERISA Affiliate intend to make any discretionary contributions (including
discretionary matching contributions) to the accounts of participants in such
Pension Plans for Plan Year ending December 31, 2004.

                  (g) Except as set forth in Schedule 3.10(g), there are no
outstanding loan balances owed by any participants in Seller's Pension Plans.

         3.11 Financial Statements. The Seller or the Company has delivered or
caused to be delivered to the Buyer copies of the Company's consolidated audited
balance sheets as of the fiscal years ended March 31, 2004, 2003 and 2002 and
the related consolidated audited statements of income, stockholders equity and
cash flows for the fiscal years ending

                                      -18-


March 31, 2004 and 2003 (collectively, the "Year End Financial Statements"). In
addition, the Seller or the Company has delivered or caused to be delivered to
the Buyer copies of the consolidated unaudited balance sheet of the Company as
of the end of the month preceding the date hereof and the related consolidated
unaudited statements of income and stockholders equity and cash flows for the
period then ended, together with all proper exhibits, schedules and notes
thereto (collectively, the "Interim Financial Statements," and collectively with
the Year-End Financial Statements, the "Financial Statements"). A true and
complete copy of the Financial Statements is attached to this Agreement as
Schedule 3.11. Except with respect to any liability, contingent or otherwise,
matured or unmatured, for the Put Option or the Poly-Gel Claims, the Financial
Statements fairly present, in all material respects, the financial position of
the Company as of the date of such Financial Statements and the results of
operations for the respective periods presented. Since March 31, 2004, there has
not been any change in the accounting methods or practices followed by the
Company, except as required by GAAP.

         3.12 Real Property.

                  (a) Neither of the Companies owns any real property. Schedule
3.12(a) attached to this Agreement contains a complete and accurate list of all
the locations of all Real Property leased by either of the Companies. (as either
tenant, subtenant, landlord, sublandlord, licensee or licensor) (the "Leased
Properties"). True, correct and complete copies of all of all such leases for
the Leased Properties have previously been provided to the Buyer. The leases for
the Leased Properties are valid, binding and in full force and effect and all
rent and other sums and charges payable under the leases for the Leased
Properties are current. Except as set forth on Schedule 3.12(a), (i) to the
Seller's Knowledge, there exists no material event of default or any condition
which with the passage of time, the giving of notice, or both, would constitute
an event of default under the terms of any Real Property lease; (ii) to the
Seller's Knowledge, no material claim has been asserted against either of the
Companies that is adverse to any of their respective rights under all Real
Property leases set forth on Schedule 3.12(a); and (iii) neither of the
Companies have any option to purchase or lease or any right of first refusal
regarding the purchase or lease of any real property.

                  (b) The Real Property and any improvements thereon are in good
condition and repair and there has been no damage, destruction or loss to any of
the Real Property and any improvements thereon or that remains unremedied to
date (ordinary wear and tear excepted). Without providing any representation or
warranty in this sentence with respect to the Real Property located at the NY
Facility, the ventilation system at the Real Property are in good working order
and repair, ordinary wear and tear excepted.

                  (c) To the Seller's Knowledge, there are no condemnation,
appropriation or other proceedings involving any taking of the Real Property
pending or threatened against any of the Real Property.

         3.13 Personal Property. Except as set forth in Schedule 3.13 attached
to this Agreement and those assets used by the UK Company or other assets not
located in the United States of America, each as set forth in Schedule 3.13, the
Company either owns good, marketable and indefeasible legal and beneficial
title, or has a valid leasehold interest in, or valid license for, all material
items of personal property (both tangible and intangible) that are used in

                                      -19-


the conduct of the Company's business and operations as presently conducted free
and clear of all Adverse Claims other than the Adverse Claims set forth on
Schedule 3.13. All tangible personal property material to the operation of the
Company's business is in such condition as is sufficient to operate the
Company's business as presently conducted in the normal and ordinary course in a
manner consistent with past practice.

         3.14 Material Contracts.

                  (a) Neither of the Companies has any Contracts (i) that are
not in full force and effect, (ii) that are not valid and binding obligations of
the Company in accordance with their respective terms and (iii) that contain any
provision or covenant prohibiting or limiting the ability of the Company to
operate the Company's business in the manner in which it is currently operated.
Schedule 3.14 contains a true and complete list of the following types of
Contracts (collectively, the "Material Contracts").

                           (i) all Contracts relating to the acquisition or the
divestiture of fixed assets, including intangible assets, physical fixed assets
(with the exception of real estate and real estate-like rights) and financial
assets whose value exceeds $10,000 per item or collectively $20,000 per
Contract;

                           (ii) all lease or rental Contracts to the extent that
they involve annual payments in excess of $10,000 per item or collectively of
$200,000 per Contract and are not terminable upon ninety (90) days notice or
less;

                           (iii) all management, service, supply, security,
maintenance and similar Contracts, and all attornment Contracts, subordination
Contracts or similar Contract affecting or relating to the use and quiet and
peaceful enjoyment of the Real Property to which either of the Companies is a
party or is otherwise bound or subject to the extent that they involve annual
payments in excess of $25,000 per Contract and that are not terminable on ninety
(90) days notice or less;

                           (iv) all Contracts for the storage, transportation,
holding, treatment, processing or disposal of any Hazardous Substances;

                           (v) all Contracts for storage, transportation or
similar services for tangible personal property with carriers or warehouses;

                           (vi) all license Contracts entered into by either of
the Companies, whether as licensor or licensee;

                           (vii) all credit Contracts entered into by either of
the Companies as lender, or borrower, or guarantor, with the exception of usual
and customary trade receivables or payables agreed to in the normal and ordinary
course of business;

                           (viii) all Contracts involving a commitment of either
of the Companies' assets or the incurrence by either of the Companies of
liabilities in any one transaction or series of related transactions in excess
of $5,000 per Contract or series of related

                                      -20-


Contracts, or that extend beyond one (1) year from the date of this Agreement,
and are not terminable upon ninety (90) days notice or less;

                           (ix) all Contracts with domestic or foreign
distributors, manufacturer's representatives, dealers, or agents which are not
terminable upon ninety (90) days notice or less;

                           (x) all employment Contracts which provide for an
annual aggregate remuneration of more than $10,000 per Contract and all
Contracts with advisors or consultants to the extent that they involve annual
payments exceeding $10,000 per Contract;

                           (xi) all Contracts relating to fringe benefits,
profit sharing, commissions, or bonuses as well as similar agreements with the
exception of those already listed in Schedule 3.10(a) attached to this
Agreement;

                           (xii) all Contracts that purport to or have the
effect of limiting the Company's right to engage in, or compete with any Person
in any business; and

                           (xiii) all Contracts in which either of the Companies
grants a power-of-attorney.

                  (b) Except as set forth on Schedule 3.14(b) attached to this
Agreement, no Consent of any party to any Material Contract to which either of
the Companies or their respective properties is a party or is otherwise bound or
subject is required in connection with the transactions contemplated by this
Agreement or any of the Transaction Documents.

         3.15 Insurance. To the Seller's Knowledge, each insurance policy
insuring the assets and properties of either of the Companies is valid and
binding. Neither of the Companies is in default under any such policy in any
material respect. Neither the Companies nor the Seller has received notice that
any insurer under any such policy is denying liability with respect to a claim
thereunder or defending under a reservation of rights clause.

         3.16 Environmental Matters. Each of the Companies and the operation of
the their respective businesses is and has been in compliance in all material
respects with all applicable Environmental Laws. Except as set forth in Schedule
3.16, to the Seller's Knowledge, there have occurred no and there are no events,
conditions, circumstances, activities, practices, incidents, or actions that may
give rise to any common law or statutory liability, or otherwise form the basis
of any Legal Proceeding, Order, remedial or responsive action, or study
involving or relating to either of the Companies, based upon or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or threatened release
into the environment, of any pollutants, contaminants, chemicals, or industrial,
toxic or Hazardous Substances.

         3.17 Permits. Each of the Companies and their respective employees,
independent contractors and agents have obtained and hold in full force all
Permits that are necessary for the operation of their respective businesses as
presently conducted where the failure to so obtain and hold would have a
Material Adverse Effect.

                                      -21-


         3.18 Taxes and Tax Returns.

                  (a) The Seller has previously delivered to the Buyer true,
correct and complete copies of each of the federal, state, and local income Tax
Returns filed by the Company and UK Company for the past three fiscal years
which were due, taking into account any extensions granted, on or before the
date hereof. All material Tax Returns required to be filed with respect to the
income, operations, business or assets of the Company or the UK Company and any
consolidated, combined, unitary or aggregate group for Tax purposes of which the
Company or the UK Company has been a member (i) have been timely filed with the
appropriate Taxing Authority in all jurisdictions in which such returns and
reports are required to be filed, (ii) all of the Tax Returns as filed are true,
correct and complete and, in all material respects, reflect accurately all
material liability for Taxes of the Company and the UK Company for the periods
to which such returns relate, (iii) and all Taxes due and owing (whether or not
shown) have been paid or provided for by adequate reserves in the Financial
Statements or the Closing Date Balance Sheet. All Taxes relating to any
employee, independent contractor, creditor, stockholder or other third party
were fully collected and paid or provided for by adequate reserves in the
Financial Statements and the Closing Date Balance Sheet, and all similar items
due through and including the Closing Date will have been fully paid by that
date or provided for by adequate reserves, whether or not any such Taxes were
reported or reflected in any Tax Returns or filings.

                  (b) Except as set forth on Schedule 3.18, neither Parent, the
Seller, the Company or the UK Company or any affiliate with which the Company or
the UK Company files consolidated or combined Tax Returns has received written
notice, or to the Knowledge of the Seller oral notice, of an audit of the
records of any of them for the purpose of verifying or disputing any Tax
Returns, reports or related information and disclosures provided to a Taxing
Authority, or for the alleged failure of any of them to provide any such Tax
Returns, reports or related information and disclosure. No written claims,
deficiencies, or assessments are either pending or have been asserted against or
inquiries raised with the Parent, the Seller, the Company or the UK Company or
any affiliate with which the Company or the UK Company files consolidated or
combined Tax Returns with respect to any Taxes which have not been paid or
otherwise satisfied, including written claims that, or inquiries whether any of
them has not filed a Tax Return that includes the operations of the Company or
the UK Company that was required to be filed. There are no outstanding requests,
agreements, consents or waivers to extend the statutory period of limitations
applicable to the assessment of any Taxes or deficiencies for which the Company
or the UK Company could be liable.

                  (c) Except for (i) any period for which a Tax Return has not
yet been filed or for unpaid Taxes not yet due for which adequate reserves have
been established on the Closing Date Balance Sheet and (ii) property Taxes that
are not delinquent, there is no Tax lien outstanding against the Stock of the
Company or any of the assets or properties of the Company or the UK Company.

                  (d) The Seller is not a foreign person for purposes of Section
1445 of the Code.

                                      -22-


                  (e) Neither the Seller, nor the Company or the UK Company has
executed any "closing agreement" or similar agreement with any Taxing Authority
which will continue with respect to periods after the Closing, or been the
subject of a private letter ruling that has continuing effect.

                  (f) Neither the Seller, nor the Company or the UK Company has
agreed or is required to make any adjustments pursuant to Section 481(a) of the
Code or any similar provision of other Tax law by reason of a change in
accounting method initiated by it or any other relevant party for periods prior
to Closing. Neither the Company or the UK Company has any application pending
with any Taxing Authority requesting permission for any changes in accounting
methods.

                  (g) Neither the Company or the UK Company has made any
payments, is not obligated to make any payments, and has not become a party to
any agreement that under certain circumstances could obligate it to make
payments that are not or will not be, as the case may be, deductible under
Section 280G or 162(m) of the Code.

                  (h) Neither the Company or the UK Company or any consolidated
or combined group of which it is a part has reported on its income Tax Returns
or taken any positions therein that could give rise to a substantial
understatement of federal or other income Tax within the meaning of Section 6662
of the Code or similar statute.

                  (i) Neither the Company nor the UK Company has entered into
any "listed transaction" as defined by Treas. Reg. Section 1.6011.4.

                  (j) All Taxes required to be paid in connection with the
issuance and any transfers of the Shares have been paid.

                  (k) After the Closing, neither the Company or the UK Company
will be parties to, or have any obligation under, any Tax sharing agreements,
Tax indemnity or other arrangement or arrangement with any Person.

                  (l) Neither the Company or the UK Company has a "permanent
establishment" other than the country in which it is incorporated.

                  (m) Neither the Company or the UK Company has ever filed or
been the subject of an election under Section 338(g) or Section 338(h)(10) of
the Code or caused or been the subject of a deemed election under Section 338(e)
thereof.

                  (n) Neither the Company or the UK Company (i) own any interest
in any entity treated as a partnership or disregarded entity by any Taxing
Authority, or (ii) has made an affirmative special election under US law with
respect to its status or classification for US Tax purposes.

                  (o) Neither the Company or the UK Company has any liability
for the Taxes of any Person for any taxable period of such Person or portion
thereof ending on or prior to the tax proration date: (i) under Treas. Reg.
ss.1.1502-6 (or any similar provision of state, local and foreign law), or (ii)
as a transferee or successor.

                                      -23-


                  (p) Neither the Company or the UK Company (A) has been the
"distributing" corporation or "controlled corporation" (within the meaning of
Section 355(a)(i)(A) of the Code) in a distribution of stock under Section 355.
There is no taxable income of the Company or the UK Company that will be
reportable in a taxable period beginning after the Closing Date or the
post-Closing portion of a Straddle Period that economically accrued in a period
beginning prior to the Closing date, by reason of the installment method of
accounting, the percentage of completion method of accounting or otherwise.

                  (q) The UK Company will not at Closing hold any investments in
U.S. property as described in Code 956, and neither the Buyer, or the Company,
will be required to include any amount in gross income after the Closing Date
with respect to the UK Company pursuant to Section 951 of the Code by reason of
transactions of the UK Company on or prior to the Closing Date.

                  (r) Schedule 3.18(r) lists, for the Tax years ending in the
preceding 12 month period, the jurisdictions in which the Company and the UK
Company have filed Tax returns, and the type of Tax return filed. For this
purpose, information returns such as IRS form 941, 940 and 1042 do not need to
be listed.

         3.19 Brokers or Finders. Except for Harris Nesbitt Corp., neither the
Company nor Seller has engaged the services of any broker or finder with respect
to the transactions contemplated by this Agreement.

         3.20 Absence of Liabilities. Except for Liabilities (as defined below)
incurred in the ordinary course of business consistent with past practice since
March 31, 2004 and any liability for any Poly-Gel Claim or with respect to the
Put Option, neither of the Companies has any direct or indirect indebtedness,
liability, claim, loss, damage, deficiency, obligation or responsibility, known
or unknown, fixed or unfixed, choate or inchoate, liquidated or unliquidated,
secured or unsecured, accrued, absolute, contingent or otherwise, including,
without limitation, liabilities on account of Taxes, other governmental charges
or lawsuits brought, or any circumstances, conditions, events or arrangements,
which are required to be reported on an audited balance sheet or disclosed in
the notes thereto that is prepared in accordance with GAAP ("Liabilities"),
which were not provided for or disclosed in (i) the Financial Statements, or
(ii) Schedule 3.20.

         3.21 Intellectual Property Rights.

                  (a) Except as set forth on Schedule 3.21(a), the Company owns
or has the rights to use pursuant to license or other agreements all
Intellectual Property as is used by the Company to conduct the business of the
Company as currently conducted (collectively, the "Intellectual Property
Rights"), except where the failure to have such ownership or right by license or
otherwise, individually and in the aggregate, would not have a Material Adverse
Effect on the Company. Schedule 3.21 sets forth a list of all (i) registered or
applied for Intellectual Property Rights owned by the Company and (ii) material
Intellectual Property Rights licensed or otherwise used by the Company in the
conduct of its business.

                                      -24-


                  (b) The manufacture, advertising, sale, distribution,
promotion, offering or use of any products or services now being manufactured,
offered or sold by the Company does not infringe, and no claim been made that
any such action infringes, the intellectual property rights of others and,
except as set forth on Schedule 3.21, the Seller has no Knowledge of (x) any
third party claim or suit or (y) any third party claims which alleges or
suggests that the Company's activities or the conduct of the business of the
Company infringes, or constitutes the unauthorized use of the Intellectual
Property rights, of any third party.

                  (c) Except as set forth on Schedule 3.21(c), the Company is
not a party to or bound by any contract (i) pursuant to which the Company has
assigned, transferred, licensed or granted to a third party any Intellectual
Property on an exclusive basis or agreed to forego from using or asserting
rights to any Intellectual Property or (ii) that contains any "most favored
nation" pricing provision with respect to any Intellectual Property Rights
licensed to any third party.

                  (d) Except as set forth on Schedule 3.21(d), to the Knowledge
of the Seller, no third party is infringing the Intellectual Property Rights of
the Company except where such infringement would not have a Material Adverse
Effect on the Company.

                  (e) The Company owns or has the right to use all software used
in the conduct of its business and, to the Seller's Knowledge, no copies of
software are resident on the computers of the Company without authorization.

                  (f) Except as set forth on Schedule 3.21(f), the Intellectual
Property that is owned by the Company is solely and exclusively owned by the
Company free and clear of all Encumbrances, and, as for all of the Company's
registered Intellectual Property or for which an application is pending, the
Company is listed in the records of the appropriate United States, state or
foreign agency, as the case may be, as the sole owner or assignee for each such
registration and application. Except as set forth on Schedule 3.21(f), all of
the Company's Intellectual Property for which registrations have been issued
are, to the Seller's Knowledge, valid and subsisting, in full force and effect,
all without challenge of any kind, and have not been abandoned, cancelled or
expired. Neither the Company, nor the Seller, has received any written
notification of any pending or threatened opposition, interference or
cancellation proceeding before any court or registration authority in any
jurisdiction against the Company's registered or pending Intellectual Property
that is owned by the Company.

                  (g) The Company takes reasonable measures to protect the
confidentiality of its Trade Secrets. To the Knowledge of the Seller, no
material Trade Secret of the Company has been improperly disclosed or authorized
to be disclosed to any third party in a manner which could reasonably be
expected to result in a forfeiture of such Trade Secret.

                  (h) Except as set forth on Schedule 3.21(h), the Company has
not granted any rights of use with respect to the Company's Intellectual
Property to any of its current or former officers, directors or employees.

         3.22 Absence of Certain Events. Except for changes disclosed on
Schedule 3.22, since March 31, 2004, the Seller has caused the Company and the
Company has

                                      -25-


caused the UK Company to conduct, and each of the Companies has conducted their
respective businesses only in the ordinary course consistent with past
practices, and since such date there has not been or occurred any action or
event listed in Section 5.7. Except as disclosed on Schedule 3.22 hereto, since
March 31, 2004, neither of the Companies have (a) suffered any damage,
destruction or loss, whether or not covered by insurance, which has had a
Material Adverse Effect; or (b) become subject to any Guaranty.

         3.23 Products.

                  (a) Except as set forth on Schedule 3.23, there exists no set
of facts (i) which would (i) require the Company, pursuant to any applicable
Requirements of Law or by order of any Governmental Authority or (ii) to the
Knowledge of the Seller, otherwise requires the Company, to recall, withdraw or
suspend any product manufactured, distributed or sold by the Company since
August 20, 1999 (each, a "Product" and collectively, the "Products") from the
market or to change the marketing classification of any such Product. There are
no material defects in the designs, specifications, or manufacture processes
with respect to any Product sold or otherwise distributed that will give rise to
any Indemnifiable Losses or that will cause such Products to not be useable as
intended or marketed.

                  (b) Schedule 3.23 sets forth a list of all correspondence
received or sent by or on behalf of the Company since January 1, 2002 from or to
any Governmental Authority with respect to a potential or actual recall,
withdrawal, or suspension from the market of any Product. Copies of all such
correspondence have been previously delivered to the Buyer.

         3.24 Inventory. The raw materials, work in process, spare parts, and
other inventory of the Company as set forth on the Financial Statements, are not
obsolete, except for such inventory as to which the Company has taken, in
accordance with GAAP, a reserve on its books and records for being obsolete, and
are of at least the standard quality for such items and are suitable for each of
the manufacture and distribution of the Company's current products of standard
quality for such products; and are not in excess of the normal purchasing
patterns of the Company. Except as set forth on Schedule 3.24, the Company does
not know of any condition materially and adversely affecting the supply of
materials available to the Company. Except as set forth on Schedule 3.24, the
amounts of the inventories reflected on the Financial Statements and on the
books and records of the Company have been determined in accordance with GAAP
consistently applied.

         3.25 Accounts Receivable. All accounts and notes receivable of either
of the Companies have arisen in the ordinary course of business, represent valid
obligations to the Companies for sales made, services performed or other
charges, and, to the Seller's Knowledge, are not subject to claims or set-off,
or other defenses or counter-claims. Except as set forth on Schedule 3.25, and
except for reserves taken on the Financial Statements, all accounts and notes
receivable of either of the Companies are collectible in the ordinary course.
All items which are required by GAAP to be reflected as accounts and notes
receivable on the Financial Statements and on the books and records of the
Companies are so reflected and have been recorded in accordance with GAAP on a
consistent basis in a manner consistent with past practice.

                                      -26-


         3.26 Absence of Certain Business Practices. None of the Companies,
their related parties or any Affiliates, the Seller or any other Person acting
on behalf of either of the Companies or, to the Seller's Knowledge, any
individual acting on behalf of any of the foregoing Persons acting alone or
together, has with respect to the business or activities of either of the
Companies: (a) received, directly or indirectly, any rebates, payments,
commissions, promotional allowances or any other economic benefits, regardless
of their nature or type, from any customer, supplier, trading company, shipping
company, governmental employee, Government Programs or other Person with whom
either of the Companies has done business directly or indirectly; or (b)
directly or indirectly, given or agreed to give any gift or similar benefit to
any customer, supplier, trading company, shipping company, governmental
employee, Government Programs or other Person who is or may be in a position to
help or hinder the business of either of the Companies (or assist either of the
Companies in connection with any actual or proposed transaction); in any of the
foregoing cases which, except as set forth on Schedule 3.26, (i) except in the
ordinary course of business, would subject either of the Companies to any damage
or any penalty in any Legal Proceeding that would reasonably be expected to have
a Material Adverse Effect, (ii) except in the ordinary course of business, if
not given in the past or continued in the future, would have a Material Adverse
Effect or (iii) if not continued in the future, would materially adversely
affect the assets, business or operations of either of the Companies or subject
either of the Companies to suit or penalty in any Legal Proceeding. Each of the
Companies has conducted its business in a manner that complies with the U.S.
Foreign Corrupt Practices Act.

         3.27 Rights, Warrants, Options. There are no outstanding (a) securities
or instruments convertible into or exercisable for any of the capital stock or
other equity interests of either of the Companies; (b) options, warrants,
subscriptions or other rights to acquire capital stock or other equity interests
of either of the Companies; or (c) except as set forth on Schedule 3.27 hereto,
commitments, agreements or understandings of any kind, including employee
benefit arrangements, relating to the issuance or repurchase by either of the
Companies of any capital stock or other equity interests of either of the
Companies, or any instruments convertible or exercisable for any such securities
or any options, warrants or rights to acquire such securities.

         3.28 Title to Securities. The Shares constitute all of the issued and
outstanding capital stock of the Company. The UK Shares constitute all of the
issued and outstanding shares of capital stock of the UK Company. The Seller is
the record and beneficial owner of, and has good and marketable title to, the
Shares and such Shares are owned free and clear of any liens, encumbrances,
pledges, security interests and claims whatsoever, including, without
limitation, claims or rights under any voting trust agreements, shareholder
agreements or other agreements. The Company is the record and beneficial owner
of, and has good and marketable title to, all of the UK Shares and such UK
Shares are owned free and clear of any liens, encumbrances, pledges, security
interests and claims whatsoever, including, without limitation, claims or rights
under any voting trust agreements, shareholder agreements or other agreements.
At the Closing, the Seller will transfer and convey, and the Buyer will acquire,
good and marketable title to the Shares, free and clear of all liens,
encumbrances, pledges, security interests and claims whatsoever. Upon transfer
of the Shares to the Buyer, the Buyer will possess ownership of the entire
business, and there will be no assets of either of the Companies or their
Affiliates not owned or leased by either of the Companies which are used by the
Company to conduct the

                                      -27-


business, of the Company as presently conducted other than (a) assets and
operations of Affiliates of the Company used to provide accounting, legal,
administrative, Tax and related functions for or on behalf of the Companies and
(b) those items set forth on Schedule 3.28 , and (c) those assets currently
utilized by the UK Company or other assets located outside of the United States.

         3.29 Major Customers and Suppliers; Supplies. Schedule 3.29 sets forth
a list of the twenty (20) largest customers (measured by dollar volume) of the
Company (the "Major Customers") and the twenty (20) largest suppliers of goods
or services (measured by dollar volume) of the Company (the "Major Suppliers")
for the fiscal year ended March 31, 2004. Except as indicated on Schedule 3.29,
all supplies and services necessary for the conduct of the business of the
Company, as presently conducted, may be obtained from alternate sources on terms
and conditions comparable to those presently available to the Company (other
than production of Gel currently supplied by Poly-Gel). Without providing any
representation or warranty in this sentence with respect to Poly-Gel except that
during August 2004, the Company provided written notice to Poly-Gel, in
compliance with the terms of the Poly-Gel Supply Agreement, that the Poly-Gel
Supply Agreement would terminate on October 31, 2004, the Seller does not have
any Knowledge of any facts, circumstances or conditions that exist which could
cause a reasonable basis for believing that any of the Company's Major Customers
or Major Suppliers is contemplating terminating its current or future
relationship with the Company. Without providing any representation or warranty
in this sentence with respect to Poly-Gel except that during August 2004, the
Company provided written notice to Poly-Gel, in compliance with the terms of the
Poly-Gel Supply Agreement, that the Poly-Gel Supply Agreement would terminate on
October 31, 2004, to the Knowledge of the Seller, no Major Customer or Major
Supplier has experienced any type of work stoppage or other material adverse
circumstances or conditions that may jeopardize or adversely affect in any
material respect the Company's current or any future relationship with any Major
Customer or Major Supplier.

         3.30 Charter, Bylaws and Corporate Records. A true, correct and
complete copy of (a) the certificate of incorporation or formation documents of
each of the Seller and each of the Companies, as amended and in effect on the
date hereof, (b) the bylaws of each of the Seller and each of the Companies, as
amended and in effect on the date hereof, and (c) the stock ledgers and stock
transfer records of each of the Companies has previously been provided to the
Buyer. The minute books of each of the Companies with respect to all proceedings
of the directors and stockholders of the Companies since January 1, 2000 has
previously been provided to the Buyer. Such minute books contain complete and
accurate records of all meetings and other corporate actions of the board of
directors, committees of the board of directors and shareholders of each of the
Companies from January 1, 2000 to the date hereof. All such meetings were duly
called and held, and a quorum was present and acting throughout each such
meeting. Such stock ledgers and stock transfer records reflect all issuances and
registrations of transfer of all shares of capital stock of each of the
Companies, and certificates representing all canceled shares of capital stock
have been returned to the stock ledger, except as to which each of the Companies
has received a lost certificate affidavit from the registered owner (or their
lawful representative) of the shares evidenced thereby. On the Closing Date, all
books and records of each of the Companies with respect to the conduct of the
business of each of the Companies will be located at the offices of the Company.
The books and records of each of the Companies are correct and

                                      -28-


complete in all material respects, have been maintained in a manner sufficient
to (i) record all financial and other business transactions of each of the
Companies, (ii) prepare financial statements of each of the Companies in
accordance with GAAP and (iii) to enforce all of the contractual rights of the
each of the Companies with respect to other Persons. Neither the Companies nor
the Seller has discarded any records with respect to any transaction or series
of transactions in violation of Requirements of Law.

         3.31 Disclosure. No representation or warranty of the Parent, the
Company, or the Seller contained in this Agreement, and no statement, report, or
certificate furnished by or on behalf of the Parent, the Company, or the Seller
or their respective agents pursuant hereto or in connection with the
transactions contemplated hereby, contains or between the date hereof and the
Closing Date will contain any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
or therein, in light of the circumstances under which such statements were made,
not misleading; provided that none of the Parent, the Company, or the Seller
makes any representations or warranties of any kind with respect to any
financial projections or other predictions of future performance furnished by or
on behalf of the Parent, the Company or the Seller or their respective agents
pursuant hereto or in connection with the transactions contemplated hereby.

                                   ARTICLE 4
                   REPRESENTATIONS AND WARRANTIES OF THE BUYER

         The Buyer hereby represents and warrants to the Parent, the Seller and
the Company as follows:

         4.1 Organization. The Buyer (i) is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
(ii) has the corporate power and authority to own and operate its assets and
properties and to transact its business as currently conducted and (iii) is duly
qualified and authorized to do business and is in good standing in all
jurisdictions where the failure to be duly qualified, authorized and in good
standing would have a Material Adverse Effect.

         4.2 Authorization for Agreement. The execution, delivery and
performance of this Agreement and the Transaction Documents and the consummation
of the transactions contemplated hereby by the Buyer (i) are within its
corporate powers and duly authorized by all necessary corporate action on the
part of the Buyer and (ii) do not (x) require any action by or in respect of, or
filing with, any governmental body, agency or official, except as set forth in
this Agreement or (y) contravene, violate or constitute a default under any
Requirements of Law applicable to the Buyer, any of its properties or any
Contract to which the Buyer or any of its properties is bound, except for the
filings and approvals set forth in Schedule 4.2 attached to this Agreement.

         4.3 Enforceability. This Agreement has been and upon the execution and
delivery thereof at the Closing the Transaction Documents will be duly executed
and delivered by the Buyer and constitute the legal, valid and binding
obligation of the Buyer enforceable against it in accordance with its terms,
except to the extent that (i) enforcement may be limited by or subject to any
bankruptcy, insolvency, reorganization, moratorium, or similar law as is now or

                                      -29-


hereinafter in effect relating to creditors' rights generally, and (ii) the
remedy of specific performance and injunctive and other forms of relief are
subject to certain equitable defenses and to the discretion of the court or
other authority or person before which any proceeding therefor may be brought.

         4.4 Litigation. There is no Legal Proceeding or Order pending against
or, to the Buyer's Knowledge, threatened against or affecting, the Buyer or any
of its properties that could adversely affect or restrict the ability of the
Buyer to consummate fully the transactions contemplated by this Agreement or
that in any manner draws into question the validity of this Agreement.

         4.5 Absence of Inducement. Buyer agrees and acknowledges that any
financial projections or other predictions of future performance furnished by or
on behalf of the Company, the Parent, the Seller or their respective agents
pursuant hereto or in connection with the transactions contemplated hereby shall
not be deemed to be or to include representations or warranties of the Seller.

                                   ARTICLE 5
                                   COVENANTS

         5.1 Performance of Conditions. The Parent, the Seller, the Company and
the Buyer shall, and each of the Seller and the Parent shall cause each of the
Companies to, take all reasonable steps necessary or appropriate and use all
commercially reasonable efforts to effect the fulfillment of the conditions
required to be obtained for the Parties to consummate the transactions
contemplated by this Agreement including, without limitation, all conditions
precedent set forth in Article 6 of this Agreement.

         5.2 Approvals. Each of the Parties shall use its respective
commercially reasonable efforts to obtain all Regulatory Approvals and Consents
from such other third Persons including, without limitation, Consents required
under Section 3.4 hereunder with respect to any Contract or any Requirements of
Law, that are necessary or advisable in connection with the consummation of the
transactions contemplated by this Agreement. The Company shall, and each of the
Seller and the Parent shall use its commercially reasonable efforts to cause the
Companies to cooperate with the Buyer to the fullest extent practicable in
seeking to obtain all such Regulatory Approvals and such Consents, and shall
provide, and shall cause the Companies to provide, such information and
communications to all Governmental or Regulatory Authorities as they, or the
Buyer may request from time to time in connection therewith. Nothing contained
herein shall require the Parties to amend the provisions of this Agreement, to
pay or cause any of its Affiliates to pay any money (other than fees required by
any applicable Requirements of Law in connection with any Regulatory Approval),
or to provide or cause any of its Affiliates to provide any guaranty to obtain
any such Regulatory Approvals or Consents. Notwithstanding anything to the
contrary contained in this Agreement, neither the Companies, the Seller nor the
Parent shall be required to obtain any Consent that may be required under the
Poly-Gel Supply Agreement.

         5.3 Cooperation; Access to Books and Records. Each of the Seller and
the Parent shall, and shall cause the Companies to, cooperate with the Buyer in
connection with the

                                      -30-


transactions contemplated by this Agreement, including, without limitation,
cooperating in the determination of which Regulatory Approvals and Consents are
required or advisable to be obtained prior to the Closing Date. Until the
Closing Date, each of the Seller and the Parent shall, and shall cause the
Companies to, afford to the Buyer and its authorized representatives, agents and
advisors reasonable access to the properties and books and records of the
Companies and to the Company's executive officers in order to make investigate
and examine the business and properties of the Company for purposes relating to
the financing of the transactions contemplated by this Agreement. Any such
investigation, access and examination shall be conducted upon reasonable prior
notice under the circumstances.

         5.4 Confidentiality.

                  (a) Each Party to this Agreement shall not disclose any
Confidential Information about any other Party to any Person unless the Party
desiring to disclose such Confidential Information receives the prior written
consent of the Party about whom such Confidential Information pertains, except
(i) to any Party's employees, agents and representatives who have a need to know
such Confidential Information for the performance of their duties as employees,
agents or representatives, (ii) to the extent strictly necessary to obtain any
Consents including, without limitation, any Regulatory Approvals, that may be
required or advisable to consummate the transactions contemplated by this
Agreement, (iii) to enforce such Party's rights and remedies under this
Agreement, (iv) with respect to disclosures that are compelled by any
Requirements of Law or pursuant to any Legal Proceeding; provided, that the
Party compelled to disclose Confidential Information pertaining to any other
Party shall provide prior written notice to such other Party thereof and use its
commercially reasonable efforts to cooperate with such other Party to obtain a
protective order or other similar determination with respect to such
Confidential Information, (v) made to any Party's legal counsel, independent
auditors, investment bankers or financial advisors under an obligation of
confidentiality or (vi) as otherwise permitted by Section 5.5 of this Agreement.
No Party shall request or receive any Confidential Information from any
Affiliate of a Party that is also an Affiliate of the other Party and any such
Confidential Information, if received, whether before or after the date of this
Agreement, shall remain Confidential Information of the Discloser.
Notwithstanding anything herein to the contrary, the Buyer shall be permitted,
solely in connection with its securing financing to fund the Cash Consideration,
to disclose to the Buyer's prospective financing sources or any of such source's
legal counsel or financial advisors for purposes of evaluating or assisting in
such financing, the substance of the transactions contemplated in the
Transaction Documents and each of the terms, conditions and other provisions
contained in the Transaction Documents.

                  (b) In the event that the transactions contemplated by this
Agreement are not consummated in accordance with the terms of this Agreement,
each Party shall, upon the request of the other Party, return to the other Party
or destroy all Confidential Information and any copies thereof previously
delivered by such requesting Party, except (i) for such documents, notes,
memoranda, analyses, computations, studies and other writing prepared by the
Party returning or destroying such Confidential Information which documents,
notes, memoranda, analyses, computations, studies and other writing shall be
destroyed by such Party and such Party shall certify such destruction in writing
to the other Party and (ii) to the extent that such Party

                                      -31-


deems such Confidential Information necessary or desirable to enforce his or its
rights under this Agreement.

                  (c) The obligation of confidentiality contained in this
Section 5.4 shall survive the termination of this Agreement, or the Closing, as
applicable, with respect to Confidential Information of the Company; provided,
that, if the Closing shall occur, then the Buyer's obligation of confidentiality
shall, solely with respect to the Confidential Information of the Company,
terminate upon the Closing.

         5.5 Public Announcements. Prior to or in connection with the Closing,
no Party shall issue any public report, statement, press release or similar item
or make any other public disclosure with respect to the execution or terms of
this Agreement or the Closing (a "Public Statement") and after the Closing, no
Party shall issue any public report, statement, press release or similar item
regarding the terms of this Agreement that is inconsistent with any Public
Statement, prior to the consultation with and approval of the other Parties,
except as such Party may if such Party's counsel deems it necessary to comply
with such Party's obligations under applicable federal, state or foreign
securities laws or stock exchange rules or regulations, issue any such report,
statement, press release or similar item or make any such public disclosure
after having made such disclosure available to the other Party and offering such
other Party reasonable opportunity to comment thereon. The Party desiring to
make the disclosure shall, in good faith, consider the other Party's reasonable
comments, provided they are promptly given.

         5.6 Insurance. The Buyer hereby agrees and acknowledges that
notwithstanding any other provision of this Agreement and any representation or
warranty of the Seller or the Parent made in this Agreement, no insurance
policy, including, without limitation, any insurance policy insuring the assets,
properties or business of the Company, will be transferred to or assumed by the
Company or the Buyer. Until eighteen (18) months after the Closing, Buyer shall
cause to have in place valid and binding insurance policies insuring the
Company, its assets, properties and business in scope and amount customary and
reasonable for the assets and properties of each of the Company and the
businesses in which the Company has engaged prior to the Closing.

         5.7 Conduct of Business by Company. Except as otherwise expressly
contemplated by this Agreement or as consented to in writing by the Buyer,
during the period from the date of this Agreement to the earlier of (a) the
termination of this Agreement in accordance with Article 9 or (b) the Closing,
each of the Seller and the Parent shall cause the Companies, and each of the
Companies shall carry on its business only in the ordinary course consistent
with past practice and in compliance in all material respects with all
Requirements of Law and, to the extent consistent therewith, use commercially
reasonable efforts to preserve intact their current business organizations, use
commercially reasonable efforts to keep available the services of their current
officers and other key employees and to preserve their relationships with those
Persons (other than Poly-Gel and any of its Affiliates) having business dealings
with either of the Companies, and shall not:

                  (a) (i) split, combine or reclassify any of its capital stock
or issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock or (ii) purchase,
redeem or otherwise acquire, directly or indirectly, any shares

                                      -32-


of capital stock of either of the Companies or any other securities thereof or
any rights, warrants or options to acquire any such shares or other securities;

                  (b) issue, deliver, sell, pledge or otherwise encumber or
subject to any Encumbrance (i) any shares of its capital stock, (ii) any other
voting securities, (iii) any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities or (iv) any "phantom" stock or stock rights, SARs or
stock-based performance units;

                  (c) amend its certificate of incorporation or bylaws;

                  (d) merge or consolidate with another Person, acquire, license
or agree to acquire or license any business, division or Person or any equity or
debt interest therein, acquire, license or agree to acquire or license any
assets, other than immaterial assets or assets acquired in the ordinary course
of business consistent with past practice, or enter into any joint venture,
partnership or similar arrangement;

                  (e) enter into any transaction with an Affiliate of the
Company other than on an arms length basis consistent with past practice;

                  (f) sell, lease, license out, sell and leaseback, mortgage or
otherwise encumber or subject to any Encumbrance (other than any Encumbrance
imposed by law, such as a carriers', warehousemen's or mechanics' lien) or
otherwise dispose of any of its properties or assets (including
securitizations), other than sales out of goods or services and non-exclusive
licenses in the ordinary course of business consistent with past practice;

                  (g) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another Person other than in the ordinary course of
business consistent with past practice, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of either of the
Companies, guarantee any debt securities of another Person, enter into any "keep
well" or other Contract to maintain any financial statement condition of another
Person or enter into any Contract having the economic effect of any of the
foregoing;

                  (h) make any loans, advances or capital contributions to, or
investments in, any other Person;

                  (i) make or agree to make any new capital expenditures, or
enter into any Contract providing for payments which, individually, are in
excess of $50,000 or, in the aggregate, are in excess of $100,000, except for
Contracts entered into in the ordinary course of business, or renewals or
extensions of existing Contracts;

                  (j) make, change or rescind any Tax election, change any
annual Tax accounting period, adopt or change any method of Tax accounting, file
any material amended Tax Return, enter into any closing agreement, settle any
Material Tax claim or assessment, surrender any right to claim a Tax refund,
offset or other reduction in Tax liability, consent to any extension or waiver
of the limitations period applicable to any Tax claim or assessment or take any
other action, if, in any of the foregoing cases, any such action, individually
or in the

                                      -33-


aggregate, would adversely affect in any material respect the Tax liability or
Tax attributes of the either of the Companies after the Closing;

                  (k) (i) pay, discharge, settle or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise) or Litigation (whether or not commenced prior to the
date of this Agreement), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past practice
or in accordance with their terms, of liabilities recognized or disclosed in the
most recent Financial Statements (or the notes thereto) of either of the
Companies or incurred since the date of such Financial Statements, or (ii) waive
the benefits of, agree to modify in any manner, terminate, release any Person
from or fail to enforce any confidentiality, standstill or similar Contract to
which either of the Companies is a party or is a beneficiary;

                  (l) except as required in order to comply with any
Requirements of Law or in connection with the Buyer's and the Seller's
respective obligations in Section 5.2, (i) establish, enter into, adopt or amend
or terminate any Employee Benefit Plan, or (ii) take any action to accelerate
any rights or benefits, or make any material determinations not in the ordinary
course of business consistent with past practice, under any collective
bargaining agreement or Employee Benefit Plan, except in each case to the extent
required to comply with any changes in the laws applicable to any such Employee
Benefit Plan or agreement;

                  (m) other than in the ordinary course of business consistent
with past practice (other than with respect to directors and officers), (i)
increase the compensation, bonus or other benefits of any current or former
director, consultant, officer or other employee, (ii) grant any current or
former director, consultant, officer or other employee or independent contractor
any increase in severance or termination pay or (iii) pay any benefit or amount
not required by a plan or arrangement as in effect on the date of this Agreement
to any such Person;

                  (n) transfer or license to any Person or entity or otherwise
extend, amend or modify or allow to revert, lapse or expire any material rights
to the Intellectual Property Rights of either of the Companies, other than in
the ordinary course of business consistent with past practices;

                  (o) enter into or amend any Material Contract other than in
the ordinary course of business consistent with past practice;

                  (p) obtain, through acquisition, lease, sublease or otherwise,
any real property or rights to use real property;

                  (q) increase the number of full-time, permanent employees of
the Company or its Subsidiaries other than as a result of hiring permanent
employees for annual salaries of less than $50,000 in the ordinary course of
business consistent with past practice;

                  (r) except insofar as may be required by any change in GAAP or
Requirements of Law, make any material changes in accounting methods, principles
or practices; or

                                      -34-


                  (s) take any action or fail to take any commercially
reasonable action, (including encouraging any other Person to take such action),
engage in any transaction or enter into any agreement that causes, or that would
reasonably be likely to, cause any of the representations or warranties of the
Seller and Parent as made the date hereof in this Agreement to be untrue as of
the Closing Date such that the condition contained in Section 6.1(a) cannot be
satisfied as of the Closing Date; provided, that the foregoing will not (i)
prohibit either the Company or the UK Company from entering into any Material
Contract in the ordinary course of business that does not result in the Company
taking any action otherwise prohibited by this Section 5.7, (ii) except as set
for the in Section 5.2, in connection with obtaining Regulatory Approval,
require the Company or the UK Company to pay any sum of money outside of the
ordinary course of business, (iii) require the Company or the UK Company to
commence any legal proceeding outside the ordinary course of business or (iv)
require the Company or the UK Company to forbear from any right to which either
of them is entitled.

                  (t) take any action to exempt or make any Person (other than
the Buyer) not subject to the provisions of Section 203 of the DGCL or any other
potentially applicable antitakeover or similar statute or regulation.

         Schedule 3.14 shall be updated by the Seller at the Closing to reflect
any Material Contracts entered into between the date hereof and the Closing Date
and which are permitted by this Section 5.7. Such updated Section 3.14 shall be
delivered to the Buyer at the Closing and shall, for all purposes hereunder, be
deemed to be the definitive Schedule 3.14 with such effect as if such updated
Schedule 3.14 were attached to this Agreement on the date hereof.

         5.8 Certain Tax Matters.

                  (a) The Seller and the Parent shall indemnify and hold the
Company, the UK Company and the Buyer, and their Affiliates and successors (the
"Buyer Indemnified Parties") harmless from and against any and all Taxes that
are imposed on or assessed against them on account of Taxes imposed upon the
Company and the UK Company or their assets (i) with respect to all taxable
periods ending on or prior to the Closing; (ii) with respect to any Person other
than any of the Company and the UK Company arising under Reg. Section 1.1502-6
(or any similar provision or state, local, or foreign law), or as a transferee
or successor or by contract or otherwise; (iii) with respect to any and all
Taxes allocated to Seller pursuant to Section 5.8(d), provided, however, that
such indemnification shall apply only if and to the extent, but only to the
extent, that the liability for such Taxes exceeds the liabilities or accruals
taken into account in the preparation of the Closing Date Balance Sheet for
Taxes relating to such periods.

                  (b) The Buyer shall be responsible for, and shall pay or cause
to be paid, and shall indemnify and hold the Seller harmless from and against,
any and all Taxes that may be imposed on or assessed against the Seller on
account of Taxes imposed on the Company or its assets and the UK Company (i) for
any taxable periods ended on or prior to the Closing Date, if and to the extent,
but only to the extent, that the liability for such Taxes does not exceed the
liabilities or accruals taken into account in the preparation of the Closing
Date Balance Sheet for Taxes relating to such periods; (ii) with respect to
taxable periods of the Company and the UK Company beginning after the Closing
Date; and (iii) with respect to any Taxes that arise by

                                      -35-


virtue of transactions occurring outside the ordinary course of business on the
Closing Date and after the Closing, and (iv) with respect to any and all Taxes
allocated to the Buyer pursuant to Section 5.8(d) hereof.

                  (c) All refunds of Taxes received by the Company (including
amounts utilized as credits against Taxes for periods after Closing) for Taxes
paid with respect to periods prior to Closing shall be property of Seller and
shall be delivered to Seller within five (5) days of the Company's receipt (or
claiming of the credit); provided, however, that the refunds to be delivered to
the Seller shall be reduced to take into account (i) Taxes payable on the
interest portion of such Tax refunds, and (ii) any withholding Taxes imposed on
the Company by reason of the delivery of the refund to Seller; provided,
further, that the reduction in the preceding clause (ii) shall not be to the
extent the Buyer or an affiliate will be entitled to offset its US Taxes for the
amount of the withholding tax paid, and the Buyer will and will cause the
Company and the UK Company to take all reasonable steps to minimize or eliminate
such withholding.

                  (d) To the extent permitted by law, in preparing the relevant
Tax Return, the Company and the Buyer shall close the taxable period of the
Company and the UK Company on the Closing Date. In any case where Requirements
of Law prohibits either the Company or the UK Company from closing its taxable
year on the Closing Date, then Taxes, if any, attributable to the taxable period
of the Company and the UK Company beginning before and ending after the Closing
Date shall be allocated (i) to Seller for the period up to and including the
Closing Date (but excluding any Taxes that arise on the Closing Date by virtue
of transactions occurring outside the ordinary course of business after the
Closing and including subpart F income earned on or prior to the Closing Date),
and (ii) to Buyer for the period subsequent to the Closing Date. For purposes of
this Section 5.8(d), Taxes for the period up to and including the Closing Date
("Seller's Taxes") shall be determined on the basis of an interim closing of the
books as of the end of the Closing Date; provided, however, that in the case of
any Tax not based on income or receipts and exemptions, allowances or deductions
calculated on an annual basis, such Seller's Taxes shall be equal to the amount
of such Tax for the taxable year multiplied by a fraction, the numerator of
which shall be the number of days from the beginning of the taxable year through
the Closing Date, and the denominator of which shall be the number of days in
the taxable year.

                  (e) Seller shall be responsible for preparing and filing or
causing to be filed all Tax Returns required to be filed by or on behalf of the
Company and the UK Company for all periods ending on or prior to the Closing
Date ("Seller's Closing Tax Returns"). Such returns shall be prepared on a basis
that is consistent with past practices. Seller shall provide Buyer with a copy
of the pro forma Tax Return at least twenty (20) days prior to filing for
Buyer's review and comment. Seller shall timely pay or cause to be paid, all
Taxes to which such returns relate for all periods covered by such returns
except to extent reserves therefor have been established on the Closing Date
Balance Sheet, in which event Buyer shall pay such Taxes.

                  (f) The Buyer shall be responsible for preparing and filing or
causing to be filed all Tax Returns required to be filed by or on behalf of the
Company and the UK for periods that begin before but end after the Closing Date
("Straddle Returns"). Such returns shall be prepared on a basis that is
consistent with past practice. Without limiting the Buyer's rights under Article
8 of this Agreement, the Buyer shall pay or cause to be paid all Taxes to which

                                      -36-


such returns relate for all periods covered by such returns. The Buyer will
provide the Seller with copies of the Straddle Period Returns at least twenty
days before the due date for filing for the Seller's review and comment. Seller
and its Tax advisors shall cooperate with Buyer and its Tax advisors from the
Closing Date, and shall make available all work papers and relevant schedules
for the preparation of the Company's and the UK Company Tax Returns including
the Straddle Returns.

                  (g) Without the Seller's prior written permission, the Buyer
shall not, and shall not permit the Company, to file any amended Tax Returns for
periods that include the period prior to Closing.

                  (h) The Seller and the Buyer shall cooperate fully with each
other and make available to each other in a timely fashion such Tax data and
other information and personnel as may be reasonably required for the payment of
any estimated Taxes and the preparation of any Tax Returns required to be
prepared hereunder. The Seller and the Buyer shall make available to the other,
as reasonably requested, all information, records or documents in their
possession relating to Tax liabilities of the Company and the UK Company for all
taxable periods thereof ending on, before or including the Closing Date and
shall preserve all such information, records and documents until the expiration
of any applicable Tax statute of limitations or extensions thereof; provided,
however, that in the event a proceeding has been instituted for which the
information, records or documents are required prior to the expiration of the
applicable statute of limitations such information, records or documents shall
be retained until there is a final determination with respect to such
proceeding.

                  (i) The Buyer and the Seller shall promptly notify each other
in writing upon receipt by the Buyer, the Company, the UK Company, the Parent or
the Seller, as the case may be, of any notice of any Tax audits, reviews,
examinations, or investigations of or assessments against any of them that
include potential taxes of the Company and the UK Company for taxable periods
beginning prior to the Closing Date and ending prior to or on or after the
Closing Date or periods ending after the Closing Date for which the Seller may
be liable (the "Tax Notification Periods"). The failure of one party promptly to
notify the other party of any such audit or assessment shall not forfeit the
right to indemnity except to the extent that the Seller is materially prejudiced
as a result. The Seller shall have the sole right to represent the Company's and
the UK Company interests in any Tax proceeding relating to such Tax audits or
assessments and to employ counsel of its choice at its expense; provided,
however, that Buyer shall have the right to consult with the Seller regarding
any Tax audit or assessment relating to any Tax Notification Period, and
provided further, that Seller shall not settle, compromise or conclude any tax
proceeding without prior written consent of the Buyer, which shall not be
unreasonably withheld or delayed. The Buyer, on the one hand, and the Seller, on
the other, each agree to cooperate fully with the other and its or their
respective counsel in the defense against or compromise of any claim in any Tax
proceeding.

                  (j) The Seller and the Buyer agree that any payments made
hereunder or under Article 8 (whether made directly to a party or to another
indemnitee) will be treated by the parties as an adjustment to the aggregate
Purchase Price, to the extent permitted by law.

                                      -37-


                  (k) All obligations under this Section 5.8 shall survive the
Closing hereunder and continue until 10 days following the expiration of the
statute of limitations on assessment of the relevant Tax. Notwithstanding the
foregoing, any claim for indemnification hereunder shall survive such
termination date if, prior to the termination date, the party making the claim
shall have advised the other party in writing of facts that may constitute or
give rise to an alleged claim for indemnification, specifying in reasonable
detail the basis under this Agreement for such claim.

                  (l) Except as expressly provided in this Section 5.8, any
claims for indemnification made pursuant to this Section 5.8 shall be made in
accordance with the procedures set forth in Section 8.5.

                  (m) The same item of Tax may be indemnified under this Section
5.8, or Article 8, but nor under both.

         5.9 Notification. Prior to the effectiveness of the Closing, as
promptly as practicable after becoming aware thereof, the Seller, the Parent and
the Company, on the one hand, and the Buyer, on the other hand, as applicable,
shall promptly notify the other Parties in writing of the occurrence, or pending
or threatened occurrence, of any event that would constitute a breach of any
covenant in this Agreement by the Party so required to notify or that would
cause any representation or warranty made by the Party so required to notify in
this Agreement to be false and incorrect (including without limitation, any
event or circumstance which would have been required to be disclosed on any
schedule to this Agreement had such event or circumstance occurred or existed on
or prior to the date of this Agreement). Provided that the notifying Party is in
compliance with the terms of this Agreement, it is agreed that any information
furnished pursuant to this Section 5.9 with respect to (i) facts that
specifically relate to any representation or warranty made by the notifying
Party that was qualified by Knowledge, of which the notifying Party becomes
aware after the execution of this Agreement or (ii) events occurring after the
execution of this Agreement that cause any representation or warranty given in
this Agreement not to be true, shall be deemed to amend the schedules to this
Agreement for purposes of Article 8, but not Article 6, such that the Party
receiving the notification will have the right not to close the transactions
contemplated hereby, but if the Closing occurs, the Party receiving such
notification shall not have any right or claim against the notifying Party with
respect to any Indemnifiable Loss that is the subject matter of such
notification, provided, however, the aggregate amount of any such Indemnifiable
Losses shall be applied to satisfy the Threshold Amount limitation contained in
Section 8.6(a). Notwithstanding any other provision of this Agreement to the
contrary, in the event any notification furnished in accordance with this
Section 5.9 is received by the non-notifying Party within five (5) Business Days
prior to the Closing Date, the non-notifying Party, may in its sole discretion,
postpone the Closing Date, and/or if applicable, the Target Date, to a date that
is up to five Business Days following the date of its receipt of the applicable
notification. In the event that the Closing Date and/or the Target Date is
postponed pursuant to the preceding sentence, no Party shall be deemed to be in
breach of this Agreement solely to the extent such postponement causes any of
its representations, warranties and/or covenants contained in this Agreement to
become untrue or unsatisfied as the result of passage of time. No notification
furnished pursuant to this Section 5.9 shall be effective unless the
notification sets for the item disclosed with sufficient particularity to allow
the Buyer

                                      -38-


to ascertain which representations, warranties or covenants in this Agreement
the notification relates.

         5.10 Acquisition Proposals; No Solicitation. The Seller, the Company,
and the Parent jointly and severally, agree that unless this Agreement has been
terminated in accordance with Section 9.1, neither the Seller, the Company, the
Parent, nor their respective Affiliates, representatives, employees or agents
(collectively, "Agents") will, between the date hereof and the Closing, directly
or indirectly, (i) solicit, encourage or negotiate any proposal (whether
solicited or unsolicited) for, or execute any agreement relating to, a sale of
all or any part of the Shares or a sale of all or substantially all of the
assets of either of the Companies, or any merger, consolidation,
recapitalization or similar transaction involving either of the Companies with
any other party (any of the foregoing is referred to as an "Acquisition
Proposal"), or (ii) provide any information regarding either of the Companies to
any third party for the purpose of soliciting, encouraging or negotiating an
Acquisition Proposal (it being understood that nothing contained in clauses (i)
or (ii) above shall restrict the Seller or the Parent or any of its Agents from
providing information as required by legal process). In addition, the Seller,
the Parent and the Company shall promptly notify the Buyer in writing of the
fact of any third party's Acquisition Proposal, or communication in connection
with any potential Acquisition Proposal to the Seller or the Company, together
with all relevant terms and conditions thereof.

         5.11 Preservation of Business. From the date hereof through the Closing
Date, the Company shall, and the Seller shall cause the Companies to use its
commercially reasonable efforts to (a) preserve each of the Companies business
organization intact, (b) keep available the services of its present officers,
and other key employees, consultants and agents, (c) maintain its present
suppliers and customers and (d) preserve its goodwill.

         5.12 Certain Employee Benefit Transition Matters.

                  (a) Effective as of the Closing Date, the Transferred
Employees (which, for purposes of this subSection 5.12(a), shall mean
Transferred Employees which are located in the United States) shall cease
participation in the Parent's 401(k) Plan and Money Purchase Pension Plan
(collectively, the "Pension Plans") and the Seller shall cause the Transferred
Employees to be fully vested in the account balances thereunder.

                  (b) Seller shall retain COBRA liabilities for any individuals
who: (i) are COBRA beneficiaries of the Company immediately prior to the Closing
Date (including those eligible to elect COBRA), and (ii) were either former
employees of the Company's NY Facility or a current or former spouse or eligible
dependent of such former employees.

                  (c) The Seller shall retain under its insurance policies,
plans and coverages for the period provided therein, employees of the Company
who as of the Closing Date are collecting or eligible to collect workers'
compensation benefits and long term disability benefits.

                  (d) Buyer shall continue to employ for a period of thirty (30)
days after the Closing Date all Transferred Employees under wage rates at least
substantially equivalent to such rates then provided by the Company and the UK
Company to each such


                                      -39-


Transferred Employee immediately before the Closing Date. Nothing contained in
the preceding sentence or elsewhere in this Agreement shall change the
employment status of any "at-will" Transferred Employee, or create or modify the
terms of any written employment agreement. After the Closing Date, the Buyer
shall be solely responsible for all obligations and liabilities associated with
the employment after the Closing Date of, or any termination of employment
related to, any Transferred Employee.

                  (e) In any termination or layoff of any Transferred Employee
as part of a "plant closing" or a "mass layoff" as these terms are defined in
the Worker Adjustment and Retraining Notification Act of 1988 ("WARN") by Buyer,
the Company or the UK Company after the Closing, Buyer will comply, if
applicable, with WARN. From and after the Closing Date, in any termination or
layoff of any Transferred Employee as part of a "plant closing" or "mass
layoff", as such terms are defined by WARN, by Buyer, the Company or the UK
Company, the Buyer will be responsible for providing notice to such employees
and Buyer acknowledges that it is responsible for complying with and providing
notice under WARN or any similar local, state or foreign law with respect to
such employees, and neither the Parent, nor the Seller, shall have any liability
or obligation to any Person with respect thereto.

         5.13 Preservation of Books and Records. Each of the Buyer and the
Company shall preserve and keep, or cause to be preserved and kept, all original
books and records in respect of the Company and the UK Company in the possession
or control of the Buyer, the Company or their respective Affiliates for a period
of six (6) years after the Closing Date or such longer period as may be required
by any applicable Requirements of Law (the "Record Retention Period"). Each of
the Seller, the Parent and their respective Affiliates and the representatives
of any of them, upon reasonable notice and for any reasonable business purpose,
shall have access during normal business hours to examine, inspect and copy such
books and records. Each of the Buyer and the Company shall provide (or cause to
be provided to) the Seller, the Parent and their respective Affiliates and the
representatives of any of them with such original books and records of the
Company and the UK Company as any of the Seller, the Parent and their respective
Affiliates and the representatives of any of them shall reasonably request in
connection with any action to which any of them is a party or in connection with
any applicable Requirements of Law. After the Record Retention Period, before
either the Buyer, the Company or any of their respective Affiliates shall
dispose of any of such books and records, the Buyer or the Company shall give at
least forty-five (45) calendar days' prior written notice of such intention to
dispose to the Seller and the Parent, and each of the Seller and the Parent
shall be given an opportunity to remove and retain all or any part of such books
and records as either the Seller or the Parent may elect.

         5.14 Non-competition and Non-interference.

                  (a) Each of the Parent and the Seller and their respective
Affiliates and successors acknowledge that in order to assure Buyer that Buyer
will retain the value of the Company as a "going concern," each of the Parent
and the Seller and their respective Affiliates, on the terms set forth in this
Section 5.14, agree not to utilize their respective special knowledge of the
business of the Company and its relationships with customers, prospective
customers, suppliers and others or otherwise compete with the Buyer or any of
its Affiliates (together with the Buyer, the "Buyer Companies") in any
Competitive Business subject to the terms hereafter

                                      -40-


set forth. For the period beginning on the Closing Date and ending on the fifth
(5th) anniversary of the Closing Date (the "Restricted Period"), each of the
Parent and the Seller and their respective Affiliates shall not (except as an
owner of five percent (5%) or less of the stock or debt of any company listed on
a national securities exchange or traded in the over-the-counter market) engage,
assist or have an interest, anywhere in the United States of America or any
other geographic area in which the Company engaged in any Competitive Business
as of the Closing Date, alone or in association with others, as principal,
officer, agent, employee, director, partner or stockholder, or through the
investment of capital, lending of money or property, rendering of services or
capital, or otherwise, in any business that is directly or indirectly engaged in
Competitive Business provided, however, during the Term (as such term is defined
in the Supply Agreement), so long as the Seller and its Affiliates are in
compliance with their obligations under the Supply Agreement, the Seller and its
Affiliates shall be permitted to engage in the promotion, marketing,
distribution, manufacture and sale of Gel Products whose Gels are comprised
solely of Gels purchased by Seller or its Affiliates from the Company or its
Affiliates or as otherwise permitted by the terms of the Supply Agreement solely
in connection with the Seller's and its Affiliates rights to mitigate under the
Supply Agreement. During the Restricted Period, each of the Parent and the
Seller and their respective Affiliates shall not, and shall not cause or permit
any of their respective employees, agents or others then under their respective
control to, directly or indirectly, whether or not on behalf of Parent or
Seller, their Affiliates, or any other Person (except as an owner of five
percent (5%) or less of the stock or debt of any company listed on a national
securities exchange or traded in the over-the-counter market), (i) accept
Competitive Business from, or solicit the Competitive Business of, any Person
who as of the Closing Date is, or who had been at any time during the two (2)
year period preceding the Closing Date, a customer, known prospective customer,
or supplier of the Company in the Competitive Business or (ii) recruit or
otherwise solicit or induce any person who is an employee or consultant of, or
otherwise engaged by the Buyer in the Competitive Business, to terminate his or
her employment or other relationship with any of the Buyer Companies or hire any
person who the Seller or the Parent is aware after reasonable inquiry has,
during the preceding one (1) year of the date of hire, left the employ of any of
the Buyer Companies who engage in the Competitive Business. Nothing contained in
this Section 5.14(a) shall prevent any of the Parent or the Seller from
advertising generally for employees or consultants, provided it only employs or
engages Persons in compliance with the terms of Section 5.14(a)(i) and(ii).
Nothing contained in this Section 5.14(a) shall prevent the Parent or the Seller
from employing or engaging (i) any or all of the Company's or the UK Company's
employees which are terminated, released, or not hired by the Company or the UK
Company after the Closing, or (ii) Ven Govindarajan.

                  (b) Each of the Parent and the Seller and their respective
Affiliates shall not at any time, directly or indirectly, knowingly use or
purport to authorize any Person to use any trademark set forth on Schedule 3.21,
or any name, mark, copyright, logo, trade dress or other identifying words or
images which are the same as or similar to those of the Company in connection
with any product or service, whether or not such use would be in a business
competitive with that of any of the Buyer Companies.

                  (c) Each of the Parent and the Seller further agree, during
the Restricted Period, not to (i) request, suggest, influence or cause any
Person, directly or indirectly, to cease doing business with or to reduce its
business with any of the Buyer Companies in the Competitive Business, or (ii)
directly or indirectly, assist any Person in inducing or otherwise

                                      -41-


counseling, advising, encouraging, or soliciting any customer of any of the
Buyer Companies in the Competitive Business to terminate or in any way diminish
its customer relationship with any of the Buyer Companies in the Competitive
Business.

                  (d) Each of the Parent and Seller acknowledge that compliance
with the restrictions set forth in this Section 5.14 will not prevent it from
earning a livelihood.

         5.15 Covenants with Respect to Company Accounts and Notes Receivable.
From and after the Closing Date, the Buyer, the Company and their respective
Affiliates shall (i) use their commercially reasonably efforts to collect all
accounts and notes receivable of the Company in accordance with the customary
business practices of the Company. In the event the Buyer settles, write-offs or
compromises any accounts and notes receivable of the Companies without the prior
written consent of the Seller which consent shall not be unreasonably withheld,
delayed or conditioned, then the Buyer will not be entitled to make a claim for
Indemnifiable Losses with respect to such settled or compromised accounts and
notes receivable pursuant to Section 8.2, except to the extent the Seller and/or
the Parent has breached the first and/or third sentences of Section 3.26.

         5.16 Use of Packaging Materials Containing the "SSL" Name. During the
period beginning on the Closing Date and ending two hundred seventy (270) days
after the Closing Date, the Company may use all Company product packaging
materials containing the "SSL" name, solely for the purpose of shipping the
Company's products, which are in the Company's possession on the Closing Date.
Upon or prior to the end of such period, the Company shall destroy all remaining
Company product packaging materials containing the "SSL" name.

         5.17 Compliance with Transfer Tax Requirements. Each of Seller and
Buyer are responsible for payment of one-half of any transfer, documentary or
stamp taxes owed to the State of New York or any regulatory agency thereof in
respect of the transactions contemplated by this Agreement. After the Closing
Date, on behalf of itself and the Seller, the Buyer shall timely file or submit
all required filings, documents, stamps, and other materials required to be
filed or submitted, and fully pay any payments due, to the State of New York or
any regulatory agency thereof in connection with or as a result of the
transactions contemplated in this Agreement.

         5.18 Office Space for Customer Service Employees in Oldham, England.
During the period beginning on the Closing Date and ending on the earlier of (i)
the date which is one hundred eighty (180) days thereafter, or, (ii) upon the
receipt of written notice from the Buyer or the Company that such accommodation
is no longer desired, the Seller or its Affiliate will provide office space and
other office support services consistent with the office support services
provided to such persons immediately prior to the Closing in an office facility
located in Oldham, England to the Buyer for use by two or fewer employees of the
Buyer or the Company without any cost or expense to the Buyer or the Company.

         5.19 Acquisition of Poly-Gel. To the extent that Poly-Gel exercises the
Put Option in accordance with the terms of the Poly-Gel Supply Agreement or the
Buyer otherwise acquires substantially all of the stock or assets of Poly-Gel
after the Closing at a price (which

                                      -42-


may include cash, capital stock of the Buyer, promissory notes issued by the
Buyer and assumed debt) not greater than $4,500,000, and the liabilities and
damages (including harm resulting from equitable remedies (which, if any, shall
be valued at an arbitration held in New York, New York pursuant to the rules of
the American Arbitration Association)) of the Agreement Parties to the Poly-Gel
Parties for the Poly-Gel Claims, exclusive of the Excluded Costs, do not exceed
$2,000,000, the Buyer shall pay to the Seller an amount in cash equal to the
difference between (i) $4,500,000 and (ii) the amount paid in respect of the Put
Option or the other acquisition of substantially all of the stock or assets of
Poly-Gel to the Poly-Gel Parties (the "Put Option Payment") on March 31, 2006 or
in the event of any Poly-Gel Claims prior to March 31, 2006, upon the Resolution
(as defined below) or the satisfaction of such Poly-Gel Claims. In the event the
Buyer pays the Put Option Payment to the Seller and any Poly-Gel Claim is
asserted after March 31, 2006, upon Resolution of such claim in an amount in
excess of $2,000,000, exclusive of the Excluded Costs, the Seller shall refund
the Buyer an amount equal to such excess but in no event shall the Seller refund
an amount to the Buyer which is greater than the Put Option Payment actually
received by the Seller (the "Put Option Refund Payment"). In addition to any
other remedy the Buyer may have against the Seller with respect to the Put
Option Refund Payment, the Buyer shall be entitled to set-off the Put Option
Refund Payment against the outstanding unpaid principal amount of the Additional
Note.

         5.20 Disputes With Poly-Gel or Its Affiliates. In the event the Buyer
has not acquired substantially all of the stock or assets of Poly-Gel and any
Poly-Gel Claims are asserted and they are finally resolved pursuant a final
unappealable judgment or the entry among the Agreement Parties and the Poly-Gel
Parties of a settlement agreement (the "Resolution"), and the liabilities of the
Agreement Parties to the Poly-Gel Parties, exclusive of the Excluded Costs but
including liability arising out of the Put Option, does not exceed $2,500,000,
or if no Poly-Gel Claims are asserted prior to March 31, 2006 and the Put Option
expired without exercise, the Buyer shall pay to the Seller, on the later of
March 31, 2006, or in the event of any Poly-Gel Claims not resolved prior to
March 31, 2006, upon the Resolution or the satisfaction of such Poly-Gel Claims,
an amount in cash equal to the sum of One Million Dollars ($1,000,000), plus an
amount (which amount shall not exceed $500,000) equal to all costs, fees,
expenses and other payments to the Parent's or Seller's legal counsel, experts,
accountants and other litigation services providers that were retained, employed
or otherwise engaged in the defense of the Poly-Gel Claims (collectively, the
"Dispute Resolution Payment"). In the event the Buyer pays the Dispute
Resolution Payment to the Seller and any Poly-Gel Claim is asserted after March
31, 2006, upon Resolution of such claim where the liabilities of the Agreement
Parties to the Poly-Gel Parties, exclusive of the Excluded Costs but including
liability arising out of the Put Option, exceeds $2,500,000, the Seller shall
refund the Buyer an amount equal to such excess but in no event shall the Seller
refund an amount to the Buyer which is greater than the Dispute Resolution
Payment actually received by the Seller (the "Dispute Resolution Refund
Payment"). In addition to any other remedy the Buyer may have against the Seller
with respect to the Dispute Resolution Refund Payment, the Buyer shall be
entitled to set-off the Dispute Resolution Refund Payment against the
outstanding unpaid principal amount of the Additional Note.

                                      -43-


                                   ARTICLE 6
                         CONDITIONS PRECEDENT TO CLOSING

         6.1 Conditions Precedent to the Buyer's Obligations. The Buyer's
obligation to consummate the transactions contemplated by this Agreement is
subject to the satisfaction of, or waiver in writing by the Buyer of, prior to
or at the Closing, each and every of the following conditions precedent:

                  (a) Representations and Warranties. Each of the
representations and warranties of the Seller, the Parent and the Company
contained in this Agreement shall be true and correct in all material respects,
provided, however, any representation and warranty that is qualified by
"material" must be true in all respects, on and as of the Closing Date with the
same force and effect as though such representations and warranties had been
made on and as of the Closing Date. The Seller, the Parent and the Company shall
each deliver to the Buyer a certificate dated the Closing Date, certifying that
all of Company's, the Seller's and the Parent's respective representations and
warranties contained in this Agreement are true and correct in all material
respects on and as of the Closing Date as though such representations and
warranties had been made on and as of the Closing Date.

                  (b) Compliance with Covenants and Conditions. The Seller, the
Parent and the Company shall have performed and complied in all material
respects with each and every covenant and agreement required by this Agreement
to be performed or satisfied by the Parent, the Company and the Seller, as the
case may be, at or prior to the Closing Date. The Seller, the Parent and the
Company shall each deliver to the Buyer a certificate, dated the Closing Date,
certifying that each of the Seller, the Parent and the Company has fully
performed and complied in all material respects with all the duties, obligations
and conditions required by this Agreement to be performed and complied with by
them at or prior to the Closing Date.

                  (c) Delivery of Documents. Each of the Seller, the Parent and
the Company shall have delivered to the Buyer all documents, certificates,
instruments and items required to be delivered by them at or prior to the
Closing pursuant to this Agreement.

                  (d) Consents. All proceedings, if any, to have been taken and
all Regulatory Approvals and any Consents of the Persons identified on Schedule
3.4 shall have been taken or obtained.

                  (e) No Legal Proceeding Affecting this Agreement. Except with
respect to any Poly-Gel Claim, there shall not have been instituted by the
Seller or the Company or their respective Affiliates and there shall not be
pending or threatened any Legal Proceeding, and no Order shall have been entered
restraining, enjoining or prohibiting or seeking to restrain, enjoin or prohibit
the consummation of transactions contemplated by this Agreement.

                  (f) Secretary's Certificate; Good Standing Certificates. The
Seller shall have delivered to the Buyer a certificate or certificates dated as
of the Closing Date and signed by the Seller to the effect that: (i)(A) the
copies of each of the Companies' respective certificates of incorporation or
formation documents attached to the certificate are true, correct and complete,
(B) no amendment to such certificates of incorporation or formation documents

                                      -44-


has occurred since the date of the last amendment annexed (such date to be
specified), (C) a true and correct copy of each of the Companies' respective
by-laws as in effect on the date thereof is annexed to such certificate and (D)
the resolutions by the Seller's board of directors authorizing the actions taken
in connection with the sale of the Shares, including as applicable, without
limitation, the execution, delivery and performance of this Agreement were duly
adopted and continue in force and effect (a copy of such resolutions to be
annexed to such certificate); and (ii) setting forth the incumbent officers of
the Seller and including specimen signatures on such certificate or certificates
of such officers executing this Agreement on behalf of Seller as their genuine
signatures. In addition, the Seller shall have delivered to the Buyer, with
respect to each of the Companies, certificates of good standing (or applicable
concept in its jurisdiction of incorporation) certified by the Secretaries of
State or other appropriate officials of the jurisdictions of their respective
incorporation or formation and all jurisdictions in which either of the
Companies are qualified to do business.

                  (g) No Material Adverse Effect. Since March 31, 2004, there
shall not have occurred any event which has had a Material Adverse Effect on the
Companies.

                  (h) Opinions of Counsel. Each of Pepper Hamilton LLP and Kuit
Steinart & Levy, legal counsel to the Seller, shall have delivered a favorable
opinion letter substantially in the respective forms attached hereto as Exhibit
6.1(h).

                  (i) Resignations. The written resignations of each of the
directors and officers of each of the Company and the UK Company, effective upon
Closing.

                  (j) Release. The Parent and the Seller shall have delivered to
the Buyer a general release in the form attached hereto as Exhibit 6.1(j) (the
"Release").

                  (k) Intellectual Property. The Company or the Buyer shall have
all right, title and interest in the Intellectual Property listed on Annex
3.21(f) free and clear of any encumbrance.

                  (l) AEI License Agreement. The Patent License Agreement
between Applied Elastomerics, Inc. and SSL Americas, Inc., dated November 30,
2001 and Amendment 1, effective November 30, 2001, shall have been assigned to
the Company.

                  (m) Brisk Logistics Agreement; Warehousing Services. The
Warehousing, Pick & Pack, and UK & European Distribution Agreement dated March
28, 2003 between SSL Americas, Inc. and Brisk Global Logistics shall have been
assigned to the Company or, in the alternative, the Seller or its Affiliates
shall provide warehousing services to the Buyer, the Company and the UK Company
which are substantially similar to those provided in the aforementioned contract
on terms which are no less favorable that those set forth in the aforementioned
contract for the remaining term of such contract, or until the effective date of
the assignment of such to the Company or the Buyer.

                  (n) Resolution of Intercompany and Affiliate Balances. The
Company and the UK Company shall have repaid or otherwise resolved outstanding
intercompany and Affiliate balances and payments owed.

                                      -45-


         6.2 Conditions Precedent to the Seller's Obligations. The Seller's
obligation to consummate the transactions contemplated by this Agreement is
subject to the satisfaction of, or waiver in writing by the Seller of, prior to
or at the Closing, each and every of the following conditions precedent:

                  (a) Representations and Warranties. Each of the
representations and warranties of the Buyer contained in this Agreement shall be
true and correct in all material respects, provided, however, any representation
and warranty that is qualified by "material" must be true in all respects, on
and as of the date of the Closing Date with the same force as though such
representations and warranties had been made on and as of the Closing Date. The
Buyer shall deliver to the Seller a certificate dated as of the Closing Date,
certifying that all of the Buyer's representations and warranties contained in
this Agreement are true and correct in all material respects on and as of the
Closing Date as though such representations and warranties had been made on and
as of the Closing Date.

                  (b) Compliance with Covenants and Conditions. The Buyer shall
have performed and complied in all material respects with each and every
covenant and agreement required by this Agreement to be performed by the Buyer
at or prior to the Closing Date. The Buyer shall deliver to the Seller a
certificate, dated the Closing Date, certifying that the Buyer has fully
performed and complied in all material respects with all the duties, obligations
and conditions required by this Agreement to be performed and complied with by
it at or prior to the Closing Date.

                  (c) Delivery of Documents. The Buyer shall have delivered to
the Seller all documents, certificates, instruments and items required to be
delivered by it at or prior to the Closing pursuant to this Agreement.

                  (d) No Legal Proceeding Affecting this Agreement. Except with
respect to any Poly-Gel Claim, there shall not have been instituted and there
shall not be pending or threatened any Legal Proceeding, and no Order shall have
been entered restraining, enjoining or prohibiting or seeking to restrain,
enjoin or prohibit the consummation of transactions contemplated by this
Agreement.

                  (e) Secretary's Certificate; Good Standing Certificates. The
Buyer shall have delivered to the Seller a certificate or certificates dated as
of the Closing Date and signed on its behalf by its Secretary to the effect
that: (i)(A) the copy of the Buyer's certificate of incorporation attached to
the certificate is true, correct and complete, (B) no amendment to such
certificate of incorporation has occurred since the date of the last amendment
annexed (such date to be specified), (C) a true and correct copy of the Buyer's
bylaws as in effect on the date thereof and at all times since the adoption of
the resolution referred to in (D) is annexed to such certificate, (D) the
resolutions by the Buyer's board of directors authorizing the actions taken in
connection with the purchase of the Shares, including as applicable, without
limitation, the execution, delivery and performance of this Agreement were duly
adopted and continue in force and effect (a copy of such resolutions to be
annexed to such certificate); and (ii) setting forth the incumbent officers of
the Buyer and including specimen signatures on such certificate or certificates
of such officers executing this Agreement on behalf of the Buyer as their
genuine

                                      -46-


signatures. In addition, the Buyer shall have delivered to the Seller a
certificate of good standing certified by the Secretary of State of the State of
Delaware with respect to the Buyer.

                  (f) Insurance of Buyer. Buyer shall have in place valid and
binding insurance policies of the types and with the limits set forth on
Schedule 6.2(f).

                  (g) Supply Agreement. The Company shall have delivered to the
Seller the Supply Agreement in the form attached hereto as Exhibit 6.2(g) (the
"Supply Agreement").

                  (h) Opinion of Counsel. Kane Kessler, P.C., legal counsel to
the Buyer, shall have delivered a favorable opinion letter substantially in the
form attached hereto as Exhibit 6.2(h).

                  (i) Pledge Agreement. The Buyer shall have delivered to the
Seller the Pledge Agreement in the form attached hereto as Exhibit 6.2(i) (the
"Pledge Agreement").

                  (j) Resolution of Intercompany and Affiliate Balances. The
Company and the UK Company shall have repaid or otherwise resolved outstanding
intercompany and Affiliate balances and payments owed.

                                   ARTICLE 7
                                    CLOSING

         7.1 Obligations of the Buyer. On the Closing Date, the Buyer shall
deliver the following items and documents:

                  (a) Purchase Price. (i) Evidence of a wire transfer to the
account designated by Seller of the Cash Consideration pursuant to Section 2.2,
(ii) the Note and (iii) the Additional Note.

                  (b) Documents. Each of the Transaction Documents,
certificates, instruments and documents contemplated to be delivered by the
Buyer pursuant to Section 6.2 of this Agreement.

         7.2 Obligations of the Seller and the Parent. (a) Documents. On the
Closing Date, each of the Seller, Parent and the Company shall deliver each of
the Transaction Documents, certificates and documents contemplated to be
delivered by them pursuant to Section 6.1 of this Agreement.

                  (b) Transfer Taxes. Payment to the Buyer of one-half of any
transfer, documentary or stamp taxes owed to the State of New York or any
regulatory agency thereof in respect of the transactions contemplated by this
Agreement.

                                      -47-


                                   ARTICLE 8
                          INDEMNIFICATION AND SURVIVAL

         8.1 Survival. The representations and warranties of the Parties
contained in this Agreement, all statements contained in any Schedule hereto or
thereto or any instrument, certificate or other item furnished at the Closing
pursuant to this Agreement shall be deemed to constitute representations and
warranties of the Parties making or delivering the same. All such
representations and warranties and the Parties' respective rights to seek
indemnification under this Article 8 for breach shall survive the Closing
hereunder for a period of eighteen (18) months after the Closing Date (the
"Survival Period"), except that the Survival Period for breach of the
representations and warranties given in Sections 3.4, 3.10, 3.18, and the first
three (3) sentences of Section 3.28 of this Agreement shall survive until the
expiration of the applicable statute of limitations; and the Survival Period for
breach of the representations and warranties given in Section 3.16 shall survive
until the sixth anniversary of the Closing Date; provided, that such rights to
seek indemnification will survive the expiration of the Survival Period to the
extent of any Indemnifiable Losses incurred prior to the expiration of the
Survival Period if a written notice which specifies such Indemnifiable Losses
and the breach of the representations and warranties giving rise thereto has
been given to the Party from whom indemnification is sought on or before 5:00
P.M., New York City time, on the date on which the Survival Period is otherwise
set to expire until such time as the indemnification claim has been finally
resolved.

         8.2 Parent's and Seller's Indemnification. The Parent and the Seller
shall, subject to the limitations set forth in this Article 8, jointly and
severally indemnify and hold harmless the Buyer, the Company, the UK Company and
any of their respective Affiliates, and each Person who controls (within the
meaning of the Securities Act) the Buyer or, after the Closing Date, the
Company, the UK Company or any of their respective Affiliates and their
respective directors, officers, employees, agents, successors and assigns and
legal representatives, from and against all Indemnifiable Losses that may be
imposed upon, incurred by or asserted against any of them resulting from,
related to, or arising out of (a) any misrepresentation or breach of any
representation or warranty by the Company, Seller or Parent under this Agreement
or any certificate furnished to the Buyer pursuant to this Agreement at the
Closing; or (b) any non-fulfillment of any covenant or other obligation under
this Agreement to be performed or observed by the Company, Seller or the Parent
before, on or after the Closing Date; provided, however, that (i) any claim for
the non-fulfillment of any covenant or other obligation under this Agreement to
be performed or observed by the Company, Seller or the Parent before or on the
Closing Date must be asserted within eighteen (18) months after the Closing
Date; (ii) no claim may be made under this Section 8.2 for any breach of any
party of the obligations and conditions set forth in subsection 5.7(s); (iii)
with respect to the representations and warranties provided in Section 3.18, the
calculation of the amount of any Taxes included as a liability in Tangible Net
Worth shall be excluded from the calculation of Indemnifiable Losses arising out
of a claim for breach of Section 3.18 to the extent (A) such breach arose from
any such Taxes, and (B) such Taxes were included in the calculation of
Indemnifiable Losses pursuant to Section 8.6(e); and (iv) this Section shall not
include any obligation to indemnify, hold harmless or defend any party with
respect to the Poly-Gel Claims.

         8.3 Buyer's Indemnification. The Buyer shall, subject to the
limitations set forth in this Article 8, indemnify and hold harmless the Seller,
each Person who controls (within the

                                      -48-


meaning of the Securities Act) the Seller, any of their respective Affiliates
and their respective directors, officers, employees, agents, successors and
assigns and legal representatives, from and against all Indemnifiable Losses
that may be imposed upon, incurred by or asserted against any of them resulting
from, related to, or arising out of (a) any misrepresentation, or breach of any
representation or warranty by the Buyer under this Agreement or any certificate
furnished to the Seller pursuant to this Agreement at the Closing, (b) any
non-fulfillment of any covenant or other obligation under this Agreement to be
performed or observed by the Buyer after the Closing Date, (c) the conduct of
the Company, the UK Company or the Buyer (excluding conduct which is the subject
of a Poly-Gel Claim, but including obligations pursuant to the Put Option as
well as conduct of the Company or its Affiliates (which for purposes of this
Section shall not include the Parent or the Seller) after the Closing which, if
the Poly-Gel Supply Agreement is not the subject of a claim, is inconsistent
with the day-to-day commercial relationship of the Company and Poly-Gel and
their respective Affiliates prior to the Closing and/or violative of applicable
law, or if the Poly-Gel Supply Agreement is the subject of a claim, is (A)
inconsistent with the day-to-day commercial relationship of the Company and
Poly-Gel and their respective Affiliates prior to the Closing and (B) violates
the Supply Agreement and/or applicable law), for a period of eighteen (18)
months after the Closing unless the Buyer has or would have a claim for
indemnification under Section 8.2 (without giving effect to Knowledge or
materiality qualifiers in Sections 3.6, 3.8, 3.18 and 3.21) with respect to any
such conduct, and (d) any claim for termination of employment (constructive or
otherwise) (and for the avoidance of doubt, no other claim which may be asserted
in connection therewith) by any Transferred Employee asserted within eighteen
(18) months of the Closing Date against the Seller or the Parent for termination
(constructive or otherwise) of such Transferred Employee by the Company or the
UK Company from and after the Closing other than where such termination arises
as a result of an act or circumstance for which Buyer would be entitled to
indemnification pursuant to Section 8.2 or would have been entitled to
indemnification pursuant to Section 8.2 if the representations and warranties
contained herein did not contain any materiality qualifiers.

         8.4 Special Indemnification.

                  (a) The Parent and the Seller shall, subject to the
limitations set forth in this Article 8, including, without limitation, the
terms of Section 8.6(b), jointly and severally indemnify and hold harmless the
Buyer, the Company, the UK Company and any of their respective Affiliates, and
each Person who controls (within the meaning of the Securities Act) the Buyer
or, after the Closing Date, the Company, the UK Company or any of their
respective Affiliates and their respective directors, officers, employees,
agents, successors and assigns and legal representatives, from and against all
Indemnifiable Losses, except with respect to the Excluded Costs of such
indemnified parties, which shall be borne by the Buyer, that may be imposed
upon, incurred by or asserted against any of them resulting from, related to, or
arising out of any Poly-Gel Claims whether by way of direct action, cross-claim,
counter claim, indemnification, recoupment, offset or otherwise.

                  (b) The Buyer shall, subject to the limitations set forth in
this Article 8, including, without limitation, the terms of Section 8.6(a),
indemnify and hold harmless the Seller, each Person who controls (within the
meaning of the Securities Act) the Seller, any of their respective Affiliates
and their respective directors, officers, employees, agents, successors and
assigns and legal representatives, from and against all Indemnifiable Losses,
except with

                                      -49-


respect to the Excluded Costs of such indemnified parties, which shall be borne
by the Seller, that may be imposed upon, incurred by or asserted against any of
them resulting from, related to, or arising out of any Poly-Gel Claims whether
by way of direct action, cross-claim, counter claim, indemnification,
recoupment, offset or otherwise.

         8.5 Payment; Procedure for Indemnification.

                  (a) In the event that the Person seeking indemnification under
this Article 8 (the "Indemnified Party") shall suffer an Indemnifiable Loss, he,
she or it shall, within sixty (60) days of becoming actually aware of incurring
any such Indemnifiable Loss, give written notice to the Party from whom
indemnification under this Article 8 is sought (the "Indemnifying Party")
describing in reasonable detail the amount of the Indemnifiable Loss and the
basis for the claimed Indemnifiable Losses (the "Indemnity Notice"). The failure
of any Indemnified Party to give the Indemnifying Party the Indemnity Notice
shall not release the Indemnifying Party of liability under this Article 8;
provided, however, that the Indemnifying Party shall not be liable for
Indemnifiable Losses incurred by the Indemnified Party that would not have been
incurred but for the delay in the delivery of, or the failure to deliver, the
Indemnity Notice. Within thirty (30) days after the receipt by the Indemnifying
Party of the Indemnity Notice, the Indemnifying Party shall either (i) pay to
the Indemnified Party an amount equal to the Indemnifiable Loss or (ii) object
to such claim, in which case the Indemnifying Party shall give written notice to
the Indemnified Party of such objection together with the reasons therefor in
reasonable detail, it being understood that the failure of the Indemnifying
Party to so object shall preclude the Indemnifying Party from asserting any
claim, defense or counterclaim relating to the Indemnifying Party's failure to
pay any Indemnifiable Loss. The Indemnifying Party's objection shall not relieve
the Indemnifying Party from its obligations under this Article 8.

                  (b) In the event the facts giving rise to the claim for
Indemnifiable Losses under this Article 8 shall involve any action or threatened
claim or demand by any third party against the Indemnified Party, the
Indemnified Party, within the earlier of, as applicable, fifteen (15) days after
receiving notice of the filing of a lawsuit or demand for arbitration or other
alternative dispute resolution procedure or sixty (60) days after receiving
notice of the existence of a claim or demand giving rise to the claim for
indemnification, shall send written notice of such claim to the Indemnifying
Party (the "Claim Notice"). The failure of the Indemnified Party to give the
Indemnifying Party the Claim Notice in a timely manner shall not release the
Indemnifying Party of liability under this Article 8; provided, however, that
the Indemnifying Party shall not be liable for Indemnifiable Losses incurred by
the Indemnified Party to the extent the Indemnifying Party is materially
prejudiced thereby. If the Indemnifying Party acknowledges and agrees in writing
that, if such claim is adversely determined, the Indemnifying Party has an
obligation to indemnify the Indemnified Party in respect thereof, then the
Indemnifying Party shall be entitled to defend such claim in the name of the
Indemnified Party at its own expense and through counsel of its own choosing
(subject to the Indemnified Party's approval of such counsel, which approval
shall not be unreasonably withheld, delayed or conditioned) and the Indemnified
Party may participate, through counsel chosen by it, at its own expense, in the
defense of any such claim. If the Indemnifying Party reserves in writing its
right to contest its obligation to indemnify the Indemnified Party if the claim
is adversely determined, the Indemnifying Party shall, nevertheless, be entitled
to control the defense thereof at its own expense and through counsel of its own
choosing (subject to the Indemnified Party's approval of

                                      -50-


such counsel, which approval shall not be unreasonably withheld, delayed, or
conditioned), and the Indemnified Party may participate, through counsel chosen
by it and at the expense of the Indemnifying Party, in the defense of such
claim. The Indemnifying Party shall give the Indemnified Party notice in writing
of its intent to defend such claim and acknowledgement of responsibility or
reservation of rights within ten (10) days after receiving the Claim Notice from
the Indemnified Party in the event of litigation, or otherwise within thirty
(30) days. If the Indemnifying Party does not elect to take over a defense or
claim, or having made such election does not, in the good faith reasonable
opinion of the Indemnified Party proceed diligently to defend such claim, then
the Indemnified Party may (after written notice to the Indemnifying Party), at
the expense of the Indemnifying Party, elect to take over the defense through
counsel of its own choosing (subject to the Indemnifying Party's approval of
such counsel, which approval shall not be unreasonably withheld, delayed or
conditioned) and proceed to handle such claim in its discretion and the
Indemnifying Party shall be bound by any defense that the Indemnified Party may
make in good faith with respect to such claim. If the Indemnified Party is
controlling the defense of any claim and does not, in the good faith reasonable
opinion of the Indemnifying Party, proceed diligently to defend such claim, then
the Indemnifying Party may (after written notice to the Indemnified Party) elect
to take over the defense thereof through counsel of its own choosing (subject to
the Indemnified Party's approval of such counsel, which approval shall not be
unreasonably withheld, delayed or conditioned). The parties agree to cooperate
in defending such third party claims and the Indemnified Party shall provide
such cooperation and such access to its books, records and properties as the
Indemnifying Party shall reasonably request with respect to any matter for which
indemnification is sought hereunder; and the parties hereto agree to cooperate
with each other in order to ensure the proper and adequate defense and proceed
to handle such claim in its discretion and the Indemnified Party shall be bound
by any defense that the Indemnifying Party may make in good faith with respect
to such claim.

                  (c) Notwithstanding anything to the contrary contained in
Section 8.5(b), the Indemnified Party shall be entitled, through counsel chosen
by it (subject to the Indemnifying Party's approval of such counsel, which
approval shall not be unreasonably withheld, delayed or conditioned, except with
respect to clause (vi) below where the Indemnified Party shall choose counsel
which is reasonable and appropriate under the circumstances), to control the
defense of any claim for Indemnifiable Losses described in any Claim Notice
given to the Indemnifying Party in accordance with Section 8.5(b) to the extent
that: (i) such claim seeks an injunction or other equitable relief against the
Indemnified Party; (ii) such claim involves criminal proceedings against the
Indemnified Party; (iii) the amount asserted in good faith by a Person entitled
to indemnification under Section 8.2 or Section 8.3, as applicable, with respect
to such claim, when aggregated with all other amounts asserted in good faith by
all Persons entitled to indemnification under Section 8.2 or Section 8.3, as
applicable, pursuant to all other then unresolved Claim Notices and Indemnity
Notices, exceeds One Million Five Hundred Thousand Dollars ($1,500,000); (iv)
such claim could result in the granting of an equitable remedy that would
reasonably be expected to have a Material Adverse Effect on the Company; (v) the
applicable claim is against, or if the defendants in any Legal Proceeding
relating to the applicable claim include, both the Indemnified Party and the
Indemnifying Party and the Indemnified Party reasonably concludes in good faith
that there are defenses available to it that are different or additional to
those available to the Indemnifying Party; or (vi) a conflict of interest exists
between the Indemnifying Party and the Indemnified Party as to such claim. In
the

                                      -51-


event that the Indemnified Party is entitled to control the defense of any claim
pursuant to this Section 8.5(c), then (x) the Indemnifying Party shall reimburse
the reasonable fees, expenses and disbursements of such counsel as incurred,
solely to the extent that such fees, expenses and disbursements are not Excluded
Costs which are incurred in connection with a claim or litigation which is the
subject of Section 8.4, and (y) the Indemnifying Party shall cooperate in
connection therewith and shall furnish such records, information and testimony
and attend such conferences, discovery proceedings, hearings, trials and appeals
as may be reasonably requested by the Indemnified Party in connection therewith;
provided that, the Indemnifying Party shall be entitled to participate, through
counsel chosen by it and at its own expense, in the defense of such claim.

                  (d) Notwithstanding anything to the contrary set forth in
subsections 8.5(b) or (c), in the event that Poly-Gel or, solely in their
capacity as such, any member or manager thereof, brings a claim against any or
all of the Seller, the Parent, SSL International plc, the Buyer, the Company,
the UK Company or their respective Affiliates, due to or brought in connection
with a Poly-Gel Claim, each such party shall be entitled, through counsel chosen
by it, to control the defense of such claim as such claim relates to such party.
Each such party shall be responsible for the satisfaction of the fees, expenses,
disbursements and charges of its counsel and all of its other Excluded Costs
with respect to such claim. Upon the execution and delivery of an agreement
governing the cooperation of the parties and joint defense arrangements,
including, without limitation, confidentiality agreements among the cooperating
parties, each of Seller, the Parent, SSL International plc, the Buyer, the
Company, the UK Company shall, and shall cause their respective Affiliates to,
except to the extent a conflict of interest exists among the Agreement Parties,
reasonably cooperate in connection with such claim and furnish such records,
information and testimony and attend such conferences, discovery proceedings,
hearings, trials and appeals as may be reasonably requested by the party or
parties to this Agreement which are party to the litigation which is the subject
of such claim; except as otherwise set forth in Section 5.20, each such
cooperating party shall so cooperate at its own expense, including, without
limitation, through counsel chosen by such cooperating party. Nothing in this
subsection 8.5(d) shall require any party to limit, relinquish or sacrifice any
defense, claim or counterclaim it may have with respect to any party which is a
plaintiff, defendant or co-defendant in any litigation which is the subject of
such claim.

                  (e) Notwithstanding any other provision of this Agreement,
neither the Indemnifying Party nor the Indemnified Party shall settle any such
claim or litigation without the written consent of the other Party, such consent
not to be unreasonably withheld, delayed or conditioned; provided, however, that
to the extent that one or more Agreement Parties is a defendant in a Poly-Gel
Claim, such Agreement Party or Agreement Parties may settle such Poly-Gel Claim
as it relates to such Agreement Party without the consent of any Agreement Party
which is not a party to such Poly-Gel Claim.

                  (f) With regard to any and all claims for which
indemnification is payable hereunder, such indemnification shall be paid by the
Indemnifying Party upon the earlier to occur of (the "Final Determination"): (i)
the entry of a judgment against the Indemnified Party and the expiration of any
applicable appeal period or if earlier, five (5) days prior to the date that the
judgment creditor has the right to execute the judgment; (ii) the entry of an
unappealable judgment or final appellate decision against the Indemnified Party;
or (iii) a

                                      -52-


settlement of the claim. Notwithstanding the foregoing, provided that there is
no good faith dispute as to the applicability of indemnification, the reasonable
legal fees and expenses of counsel to the Indemnified Party shall be reimbursed
on a current basis by the Indemnifying Party if such legal fees and expenses are
a liability of the Indemnifying Party. With regard to other claims for which
indemnification is payable hereunder, such indemnification shall be paid
promptly by the Indemnifying Party upon demand by the Indemnified Party.

                  (g) While the Note is outstanding, the Buyer shall not have
the right to have any indemnification claims of the Buyer against the Parent and
the Seller satisfied by reducing the Principal Sum (as defined in the Note) or
the principal or interest under the Additional Note. During the period beginning
on the full and indefeasible repayment of the Note until the full and
indefeasible repayment of the Additional Note, the Buyer shall have in its sole
discretion the option to have any indemnification claims of the Buyer against
the Parent and the Seller pursuant to this Section 8.5 satisfied by reducing the
principal or interest under the Additional Note by the aggregate amount for
which the Buyer is determined to be liable under this Section 8.5 and Section
8.6 (the "Right of Set-Off"). To the extent that it is so determined that the
Buyer is not liable for the amount by which the principal or interest of the
Additional Note was reduced pursuant to the Buyer's Right of Set-Off, the
principal amount of the Additional Note shall be increased by such amount as of
the date of such prior reduction. Notwithstanding the preceding sentence, the
Parent and the Seller shall be fully liable (subject to the limitations set
forth in this Section 8.5 and Section 8.6) for such indemnification claim(s) (i)
if the Buyer does not so elect to reduce the principal or interest of the
Additional Note pursuant to its Right of Set-Off or (ii) to the extent such a
reduction in the principal or interest of the Additional Note is not available.
Neither the exercise of, nor the failure to exercise, the Right of Set-Off will
constitute an election of remedies, nor limit the Buyer in any manner in the
enforcement of any other remedies available to it.

         8.6 Limitations of Indemnification. Notwithstanding any other provision
of this Agreement to the contrary, the right of the Indemnified Parties to
indemnification under Section 8.2 and 8.4 shall be subject to the following
provisions:

                  (a) No indemnification shall be payable pursuant to Section
8.2 hereof unless the total of all such claims exceeds One Hundred Fifty
Thousand Dollars ($150,000) in the aggregate (the "Threshold Amount"), whereupon
the amount of such claims in excess of the Threshold Amount shall be recoverable
in accordance with the terms hereof. No indemnification shall be payable
pursuant to Section 8.4(b) hereof unless the Seller or the Parent has actually
paid Two Million Dollars ($2,000,000) in the aggregate pursuant to Section
8.4(a) (the "Poly-Gel Threshold Amount"), whereupon the amount of such claims in
excess of the Poly-Gel Threshold Amount shall be recoverable in accordance with
the terms hereof.

                  (b) The maximum aggregate liability of the Seller and the
Parent to provide indemnification pursuant to Section 8.4(a) hereof shall not
exceed Two Million Dollars ($2,000,000). Subject to the preceding sentence and
(c) below, the maximum aggregate liability of the Seller and the Parent to
provide indemnification pursuant to this Agreement shall not exceed the lesser
of (i) Seven Million Dollars ($7,000,000), or (ii) the Cash Consideration, as
may be reduced , as contemplated in Section 2.2(b), plus, any and all amounts
actually paid in cash by the Buyer under the Note to the Seller, plus, solely by
way of offset, if and only to the

                                      -53-


extent available and for so long as the Additional Note is a valid and
enforceable obligation of the Buyer, pursuant to the terms of Section 8.5(g),
any amount remaining to be paid under the Additional Note; provided, however,
that nothing in this Agreement shall limit, terminate or condition the
prohibition set forth in Section 8.5(g) with respect to the right of offset,
counterclaim or set-off against the Note.

                  (c) The maximum aggregate liability of the Seller and the
Parent to provide indemnification pursuant to Section 5.8 as well as any claim
for indemnification for breaches of the representations and warranties contained
in Sections 3.10, 3.16, 3.18 and the first three sentences of Section 3.28 or
any claim of fraud by the Buyer shall not exceed an amount equal to (i) the Cash
Consideration as may be reduced, as contemplated in Section 2.2(b), plus (ii)
any and all amounts actually paid in cash by the Buyer under the Note to the
Seller, plus (iii) solely by way of offset, if and only to the extent available
and for so long as the Additional Note is a valid and enforceable obligation of
the Buyer, pursuant to the terms of Section 8.5(g), any amount remaining to be
paid under the Additional Note; provided, however, that nothing in this
Agreement shall limit, terminate or condition the prohibition set forth in
Section 8.5(g) with respect to the right of offset, counterclaim or set-off
against the Note.

                  (d) To the extent that Buyer, the Company or any of their
respective Affiliates receive any payment from the Seller and/or the Parent in
connection with the non-payment of any account or note receivable of the Company
in the ordinary course, and subsequent to the receipt of such payment by the
Buyer, the Company or their respective Affiliates, the Buyer, the Company or
their respective Affiliates receive any payment from the an obligor with respect
to such account or note receivable, then Buyer shall (and shall cause the
Company and such Affiliate to) hold in trust for and pay to the Seller the
lesser of (i) the amount received from such obligor and (ii) the amount paid by
the Seller and/or the Parent on account of such receivable, within fifteen (15)
days of receipt thereof.

                  (e) In the event the Tangible Net Worth as set forth on the
Statement of Tangible Net Worth exceeds the Minimum Tangible Net Worth, the
Buyer shall not be entitled to assert a claim for Indemnifiable Losses pursuant
to Section 8.2, arising from a breach of the Seller's and Parent's
representations or warranties relating to the specific items and amounts used in
the calculation of the Tangible Net Worth, until the amount of such
Indemnifiable Losses exceeds the difference between the Minimum Tangible Net
Worth and the Tangible Net Worth, and then only to the extent that such
Indemnifiable Losses would have caused the Tangible Net Worth to be less than
the Minimum Tangible Net Worth. Notwithstanding the foregoing, in the event the
Tangible Net Worth as set forth on the Statement of Tangible Net Worth is less
than the Minimum Tangible Net Worth and the Purchase Price is reduced pursuant
to Section 2.4, the Buyer shall not be entitled to assert a claim for
Indemnifiable Losses pursuant to Section 8.2, to the extent such claim arises
from a breach of the Seller's and Parent's representations or warranties
relating to the specific items that resulted in such decrease in the Purchase
Price pursuant to Section 2.4.

                  (f) Except as set forth in Section 5.9, the right to
indemnification or any other remedy based on representations, warranties,
covenants and obligations in this Agreement will not be affected by any
investigation conducted with respect to, or any knowledge acquired (or capable
of being acquired) at any time, whether before or after the execution and

                                      -54-


delivery of this Agreement or the Closing Date, with respect to the accuracy or
inaccuracy of or compliance with, any such representation, warranty, covenant or
obligation. The waiver of any condition based on the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification or any
other remedy based on such representations, warranties, covenants and
obligations.

         8.7 Exclusive Remedy. From and after the Closing Date, the rights of
the Persons entitled to indemnification under Section 5.8 and this Article 8 are
the sole rights and remedies of such Persons under this Agreement, at law;
provided, however, with respect to the subject matter of subSection 8.3(c), the
Parent and the Seller shall have such rights and remedies as may be available at
law or in equity following the eighteen month period after the Closing Date.
With the exception of fraud, for which all rights and remedies shall be
available to such Persons, all other rights and remedies are hereby waived.

         8.8 Joint and Several Obligation. All representations, warranties,
covenants, agreements, and liabilities of the Seller, the Parent, and the
Company under this Agreement, shall be the joint and several obligations of the
Seller, the Parent, and the Company and for the benefit of the Buyer.
Notwithstanding the foregoing, after Closing, none of the provisions of this
Agreement shall give rise to any right of action by or for the Seller or the
Parent, and the Seller or the Parent shall not have any rights, against the
Company if a remedy is sought or obtained against the Seller or the Parent
because the Company breaches any representation, warranty, covenant or agreement
set forth herein on or prior to the Closing.

                                   ARTICLE 9
                            TERMINATION AND REMEDIES

         9.1 Termination. This Agreement may be terminated, and the transactions
contemplated by this Agreement may be abandoned:

                  (a) at any time before the Closing, by the mutual written
agreement between the Seller and the Buyer;

                  (b) at any time before the Closing, by the Buyer if any of the
Company's, the Seller's, and/or the Parent's representations or warranties
contained in this Agreement were incorrect in any material respect when made or
become incorrect in any material respect and the Buyer has materially complied
with each and every obligation of Buyer herein and each representation and
warranty of Buyer shall have been complete and correct in all material respects
when made;

                  (c) at any time before the Closing, by the Seller if any of
the Buyer's representations or warranties contained in this Agreement were
incorrect in any material respect when made or become incorrect in any material
respect and the Seller has materially complied with each and every obligation of
Seller herein and each representation and warranty of Seller shall have been
complete and correct in all material respects when made;

                  (d) at any time before the Closing, by the Seller, on the one
hand, upon any material breach by the Buyer of its covenants or agreements
contained in this Agreement, and by the Buyer, on the other hand, upon any
material breach by either the Company, the Seller

                                      -55-


or the Parent's of its covenants or agreements contained in this Agreement and
the failure of such Party's to cure such breach, if curable, within ten (10)
days after written notice thereof is given by the non-breaching Party to the
breaching Party and the non-breaching Party has complied in all material
respects with each and every obligation of the non-breaching Party herein and
each representation and warranty of the non-breaching Party shall have been
complete and correct in all material respects when made; or

                  (e) by either Party if the Closing does not occur on or before
the Target Date and the failure of the Closing to occur on or before the Target
Date is not caused by any material breach of this Agreement by the Party
terminating under this Section 9.1(e).

                  (f) by the Buyer at any time at or prior to Closing in its
sole discretion, if any legal proceeding is commenced by any governmental agency
or other person for the purpose of preventing the consummation of the Closing
and the Buyer reasonably and in good faith believes that the Closing will not
occur on or prior to the Target Date.

         9.2 Effect of Termination. If this Agreement is validly terminated
pursuant to Section 9.1, this Agreement shall forthwith become void, and, except
as set forth in this Section 9.2, there shall be no liability under this
Agreement on the part of the Seller or the Buyer and all rights and obligations
of each Party to this Agreement shall cease; provided, that (i) the provisions
with respect to expenses in Section 10.4 shall indefinitely survive any such
termination, (ii) the provisions with respect to confidentiality of Section 5.4
shall survive any such termination until it, by its own terms, is no longer
operative and (iii) this Section 9.2 and Section 9.3 shall indefinitely survive
such termination.

         9.3 Claim for Breach. Notwithstanding any provision of Section 9.2 or
8.7 to the contrary, if this Agreement is validly terminated by a Party (the
"Terminating Party") pursuant to Section 9.1(b), 9.1(c) or 9.1(d) as a result of
the breach by the other Party of any representation or warranty of such Party,
or the failure of such Party to perform any covenant of such Party in this
Agreement, the Terminating Party shall be entitled to avail itself cumulatively
of any and all remedies available at law or in equity; provided, however, the
maximum liability of any such breaching party, whether in contract, tort, or
otherwise, shall not exceed an amount equal to Five Million Dollars
($5,000,000.00). In no event shall any Party be liable to any other Party for
any special, consequential, punitive or exemplary damages of such other Party.

         9.4 Termination for Fraud. Notwithstanding anything to the contrary
contained herein, if the termination of this Agreement is a result of fraud, the
aggrieved party shall be entitled to recover from the non-performing party all
out-of-pocket expenses which such aggrieved Party has incurred and the
termination of this Agreement shall not be deemed or construed as limiting or
denying any other legal or equitable right or remedy of such Party.

                                   ARTICLE 10
                                  MISCELLANEOUS

         10.1 Notices. All notices required to be given to any of the Parties of
this Agreement shall be in writing and shall be deemed to have been sufficiently
given, subject to the further provisions of this Section 10.1, for all purposes
when presented personally to such Party

                                      -56-


or sent by any reputable international overnight delivery service, with proper
charges prepaid, to such Party at its address set forth below:

   If to the Company                    Silipos, Inc., c/o
   (before the Closing Date):           SSL Americas, Inc.
                                        3585 Engineering Drive, Suite 200
                                        Norcross, Georgia 30092
                                        Attention: Robert Kaiser, Vice President
                                        and General Counsel
                                        Facsimile: (770) 582-2226

   With a copy to:                      Pepper Hamilton LLP
                                        400 Berwyn Park
                                        899 Cassatt Road
                                        Berwyn, Pennsylvania 19312-1183
                                        Attention: James D. Rosener, Esquire
                                        Facsimile: 610-640-5480

   If to the Parent:                    SSL Americas, Inc.
                                        3585 Engineering Drive, Suite 200
                                        Norcross, Georgia 30092
                                        Attention: Robert Kaiser, Vice President
                                        and General Counsel
                                        Facsimile: (770) 582-2226

   If to the Seller:                    SSL Holdings, Inc.,
                                        c/o SSL Americas, Inc.
                                        3585 Engineering Drive, Suite 200
                                        Norcross, Georgia 30092
                                        Attention: Robert Kaiser, Vice President
                                        and General Counsel
                                        Facsimile: (770) 582-2226

   With a copy to:                      Pepper Hamilton LLP
                                        400 Berwyn Park
                                        899 Cassatt Road
                                        Berwyn, Pennsylvania 19312-1183
                                        Attention: James D. Rosener, Esquire
                                        Facsimile: 610-640-5480

   If to the Buyer (before or after     Langer, Inc.
   the Closing Date) or the Company     450 Commack Road
   (after the Closing Date):            Deer Park, New York 11729
                                        Attention: Chief Executive Officer
                                        Facsimile: (631) 667-1203

                                      -57-


   With a copy to:                      Kane Kessler, P.C.
                                        1350 Avenue of the Americas
                                        New York, New York 10019
                                        Attention: Robert L. Lawrence, Esq.
                                        Facsimile: (212) 245-3009

Such notice shall be deemed to be received (a) when delivered if delivered
personally, (b) upon confirmation of receipt if delivered via facsimile or
electronic mail, or (c) two (2) business days after the date sent if sent by a
reputable international overnight delivery service. Any notice of any change in
such address shall also be given in the manner set forth above. Whenever the
giving of notice is required, the giving of such notice may be waived in writing
by the \Party entitled to receive such notice.

         10.2 No Third Party Beneficiaries. Except as is otherwise provided
herein, this Agreement is not intended to, and does not, create any rights in or
confer any benefits upon anyone other than the Parties hereto.

         10.3 Schedules. All schedules attached to this Agreement are
incorporated by reference into this Agreement for all purposes.

         10.4 Expenses. The Buyer shall pay its own, and the Seller shall pay
its own and the Company's, expenses incident to the preparation, negotiation and
execution of this Agreement including, without limitation, all fees and costs
and expenses of their respective accountants, investment bankers, and legal
counsel; provided, however, that the Buyer shall reimburse the Seller for
one-half of all fees and expenses incurred by the Company in connection with the
preparation of the Year End Financial Statements within 10 days after the
Buyer's receipt of the Seller's written statement therefore, and that the Seller
shall pay the finders fee of Harris Nesbitt Corp.

         10.5 Further Assurances. The Seller, the Parent and the Buyer shall, at
its own expense, from time to time upon the request of the other, execute and
deliver, or cause to be executed and delivered, at such times as may reasonably
be requested by the Company, the Buyer, the Seller and the Parent, such other
documents, certificates and instruments and take such actions as the Company,
the Buyer, the Seller or the Parent deems reasonably necessary to consummate
more fully the transactions contemplated by this Agreement, including, without
limitation, with respect to Intellectual Property or Material Contracts.

         10.6 Entire Agreement; Amendment. This Agreement and any other
documents, instruments or other writings delivered or to be delivered pursuant
to this Agreement constitute the entire agreement among the Parties with respect
to the subject matter of this Agreement and supersede all prior agreements,
understandings, and negotiations, whether written or oral, with respect to the
subject matter of this Agreement. None of the terms and provisions contained in
this Agreement can be changed without a writing signed by all Parties hereto.

                                      -58-


         10.7 Article, Section and Paragraph Titles. The article, Section and
paragraph titles used in this Agreement are for convenience only and are not
intended to define or limit the contents or substance of any such article,
Section or paragraph.

         10.8 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of each of the Parties to this Agreement and their respective heirs,
personal representatives, and successors and permitted assigns. Neither the
Parent, the Seller, or the Company, on the one hand, nor the Buyer, on the other
hand, shall have the right to assign this Agreement without the prior written
consent of the other Parties hereto. Notwithstanding the preceding sentence, the
Buyer may assign its rights hereunder to a wholly-owned subsidiary; and provided
further that in the event of such assignment nothing shall relieve the Buyer
from its obligations hereunder.

         10.9 Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute one and the same
instrument.

         10.10 Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or such provision, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

         10.11 Governing Law. This Agreement shall be governed and construed as
to its validity, interpretation and effect by the laws of the State of New York
notwithstanding the choice of law rules of the State of New York or any other
jurisdiction.



                            [Signature page follows.]



                                      -59-


         IN WITNESS WHEREOF, each of the Parties to this Stock Purchase
Agreement have caused this Agreement to be duly executed as of the date first
written above.



                                                THE PARENT

                                                LRC NORTH AMERICA, INC.


                                                By: /s/ Robert Kaiser
                                                    -----------------

                                                Name: Robert Kaiser

                                                Title: Vice President



                                                THE SELLER

                                                SSL HOLDINGS, INC.



                                                By: /s/ Robert Kaiser
                                                    -----------------

                                                Name: Robert Kaiser

                                                Title: Vice President



                                                THE COMPANY

                                                SILIPOS, INC.



                                                By: /s/ Robert Kaiser
                                                    -----------------

                                                Name: Robert Kaiser

                                                Title: Vice President




                  [signature page to Stock Purchase Agreement]







                                  THE BUYER


                                  LANGER, INC.



                                  By: /s/ Andrew H. Meyers
                                      --------------------

                                  Name: Andrew H. Meyers

                                  Title: Chief Executive Officer and President





                  [signature page to Stock Purchase Agreement]

EX-4.1

                                                                     Exhibit 4.1

================================================================================





                       NOTE AND WARRANT PURCHASE AGREEMENT

                                   DATED AS OF

                               SEPTEMBER 30, 2004

                                 BY AND BETWEEN

                                  LANGER, INC.

                                       AND

                   THE PURCHASERS LISTED ON SCHEDULE I HERETO

                                 WITH RESPECT TO

                          7% SENIOR SUBORDINATED NOTES
                      AND WARRANTS TO PURCHASE COMMON STOCK








================================================================================




                       NOTE AND WARRANT PURCHASE AGREEMENT
                          7% SENIOR SUBORDINATED NOTES
                        WARRANTS TO PURCHASE COMMON STOCK

     NOTE AND WARRANT PURCHASE AGREEMENT (the "Agreement") dated as of September
30, 2004, by and between LANGER, INC., a Delaware corporation (the "Seller"),
and the Purchasers set forth on the signature pages affixed hereto (each a
"Purchaser" and collectively the "Purchasers").


                                   WITNESSETH:

     WHEREAS, the Purchasers are willing to purchase from the Seller, and the
Seller desires to sell to the Purchasers, an aggregate of $5,500,000 principal
amount of 7% Senior Subordinated Notes due September 30, 2007 (the "Notes") and
Common Stock Purchase Warrants (the "Warrants") entitling the holders thereof to
purchase an aggregate of 110,000 shares of the Seller's common stock, $0.02 par
value (the "Common Stock"), at an exercise price of $0.02 per share (subject to
adjustment as more fully set forth herein and in the Warrants).

     NOW, THEREFORE, in consideration of the mutual promises and
representations, warranties, covenants and agreements set forth herein, the
parties hereto hereby agree as follows:


                                    ARTICLE I
                                PURCHASE AND SALE

     1.1 PURCHASE AND SALE. On the terms and subject to the conditions set forth
in this Agreement, at the Closing (as defined in Section 2.2), the Seller will
sell and each of the Purchasers will purchase (i) the Notes in the principal
amounts set forth on Schedule 1 hereto, and (ii) the numbers of Warrants set
forth on Schedule 1 hereto. The shares of Common Stock issuable upon exercise of
the Warrants are referred to herein as the "Warrant Shares."

     1.2 TERMS OF THE NOTES AND THE WARRANTS. The terms and provisions of the
Notes are more fully set forth in the Form of Senior Subordinated Note, in the
form attached hereto as Exhibit A. The terms and provisions of the Warrants are
more fully set forth in the Form of Common Stock Purchase Warrant, in the form
attached hereto as Exhibit B.

     1.3 TRANSFERS; LEGENDS.

         (a) The Notes may be transferred, in whole or in part, by any of the
Purchasers at any time by delivering written transfer instructions to the
Seller, and the Seller shall reflect such transfer

                                       1


on its books and records and reissue appropriate Notes upon surrender of Notes
evidencing the Notes being transferred, provided that if the Seller determines
in good faith that under applicable securities laws an opinion of counsel should
be obtained in connection with such transfer or assignment, then it may
condition its reflecting such transfer or assignment on its books and records on
receipt of such opinion. Any such transfer shall be made by a Purchaser in
accordance with applicable law.

         (b) The certificates representing the Notes, the Warrants and the
Warrant Shares, until such time as such securities are sold pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
shall contain a legend substantially in the following form:

          "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
          REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
          BE SOLD, ASSIGNED OR TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE
          REGISTRATION STATEMENT UNDER SAID ACT OR UNLESS THE ISSUER HAS
          RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER
          THAT REGISTRATION UNDER SAID ACT IS NOT REQUIRED."


                                   ARTICLE II
                           PURCHASE PRICE AND CLOSING

     2.1 PURCHASE PRICE. The aggregate purchase price (the "Purchase Price") to
be paid by the Purchasers to the Seller to acquire the Notes and the Warrants
shall be $5,500,000.

     2.2 THE CLOSING. The closing of the transactions contemplated under this
Agreement (the "Closing") shall take place at the offices of Kane Kessler, P.C.,
1350 Avenue of the Americas, 26th Floor, New York, New York. The Closing shall
take place on the date hereof.

     2.3 DELIVERIES.

         (A) DELIVERIES BY THE SELLER. At Closing, the Seller shall deliver or
cause to be delivered to the Purchasers the following:

         1.  (i)  The Notes duly executed by the Seller; and

             (ii) Certificates evidencing the Warrants.

         2.  A legal opinion of Kane Kessler, P.C. counsel to the Seller
             ("Seller's Counsel"), in form and substance satisfactory to the
             Purchasers.

                                       2


         3.  The Secretary's certificate and other documents, as contemplated by
             Section 8.1.

         (B) DELIVERIES BY THE PURCHASERS. At the Closing, each Purchaser shall
deliver or cause to be delivered to the Seller the such Purchaser's pro rata
portion of the Purchase Price as set forth opposite such Purchaser's name on
Schedule 1 hereto, in cash by either wire transfer of immediately available
funds or certified or cashier's check or in accordance with the Seller's
instructions (which instructions shall be given to the Purchasers in writing no
later than three (3) Business Days prior to the Closing). For purposes of this
Agreement, "Business Day" means any day other than a Saturday, Sunday or other
day on which banks in the State of New York are legally authorized to close.


                                   ARTICLE III
                  REPRESENTATIONS AND WARRANTIES OF THE SELLER

         The Seller hereby represents and warrants to the Purchasers as follows:

     3.1 CORPORATE EXISTENCE AND POWER. The Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and has all corporate powers required to carry on its business as
now conducted. The Seller is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where the failure to be
so qualified would not have a Material Adverse Effect on the Seller. For
purposes of this Agreement, the term "Material Adverse Effect" means, with
respect to any Person or entity, a material adverse effect on its condition
(financial or otherwise), business, properties, assets, liabilities (including
contingent liabilities), or results of operations. For purposes of this
Agreement, the term "Person" means an individual, corporation, partnership,
limited liability company, trust, business trust, association, joint stock
company, joint venture, sole proprietorship, unincorporated organization,
governmental authority or any other form of entity not specifically listed
herein. Each of the Seller's Subsidiaries is a corporation or limited company
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its formation, and has all corporate powers required to carry on
its business as now conducted. For purposes of this Agreement, the term
"Subsidiary" means, with respect to any entity, any corporation or other
organization of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are directly or indirectly owned by such entity or
of which such entity is a partner or is, directly or indirectly, the beneficial
owner of 50% or more of any class of equity securities or equivalent profit
participation interests.

     3.2 CORPORATE AUTHORIZATION. Except for the approval of the authorization
and issuance of the Warrant Shares by the shareholders of the Company, the
execution, delivery and performance by the Seller of this Agreement, the Notes
and the Warrants, and the consummation of the transactions contemplated hereby
(including, but not limited to, the sale and delivery of the Notes

                                       3


and the Warrants, and the subsequent issuance of the Warrant Shares upon
exercise of the Warrants) have been duly authorized, and no additional corporate
action is required for the approval of this Agreement. The Warrant Shares have
been duly authorized and reserved for issuance by the Seller in an amount
sufficient to cover all exercises of the Warrants. This Agreement, the Notes and
the Warrants have been or, to the extent contemplated hereby, will be duly
executed and delivered and constitute, or will constitute, the legal, valid and
binding agreements of the Seller enforceable against it in accordance with their
respective terms, except as may be limited by bankruptcy, reorganization,
insolvency, moratorium and similar laws of general application relating to or
affecting the enforcement of rights of creditors, and except as enforceability
of its obligations hereunder are subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

     3.3 CAPITALIZATION. The authorized capital stock of the Seller on the date
hereof consists of 50,000,000 shares of Common Stock, of which 4,380,851 shares
were issued and outstanding as of August 12, 2004, and 250,000 shares of
preferred stock, no par value, no shares of which have been issued. All of the
issued and outstanding shares of the Seller's Common Stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
pre-emptive rights and were issued in full compliance with applicable state and
federal securities law and any rights of third parties.

     3.4 GOVERNMENTAL AUTHORIZATION. No material consent, approval or
authorization of, or declaration or filing with, any governmental authority on
the part of the Seller or any of its Subsidiaries is required for the valid
execution and delivery of this Agreement, the Notes and the Warrants and the
consummation of the transactions contemplated hereby (including, but not limited
to, the sale and delivery of the Notes and the Warrants and the subsequent
issuance of the Warrant Shares upon exercise of the Warrants), except where the
failure to obtain such consent or make such filing would not have a Material
Adverse Effect on the Seller, and except for appropriate filings (i) with the
Securities and Exchange Commission ("SEC") and the NASDAQ of a Form D, (ii) with
the NASDAQ of an additional listing application for the Warrant Shares, and
(iii) with such state securities commissions in respect of "blue sky" laws as
may be appropriate.

     3.5 NO CONFLICT, BREACH, VIOLATION OR DEFAULT. The execution, delivery and
performance of this Agreement, the Notes and the Warrants by the Seller, and the
consummation by the Seller of the transactions contemplated hereby (including
the issuance of the Warrant Shares) do not and will not conflict with or result
in a breach or violation of any of the terms and provisions of, or constitute a
default under (a) the Seller's Certificate of Incorporation or the Seller's
Bylaws, both as in effect on the date hereof (true and complete copies of which
have been made available to the Purchasers through the SEC's EDGAR system), (b)
any statute, rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Seller or any of its
Subsidiaries, or any of their respective material assets or properties, or (c)
any material agreement or instrument to which the Seller or any of its
Subsidiaries is a party or by which the Seller or any of its Subsidiaries is
bound or to which any of their respective assets or properties are

                                       4


subject, except, in the case of clauses (b) and (c) only, for such conflicts,
breaches or violations as have not and could not reasonably be expected to
result in, individually or in the aggregate, a Material Adverse Effect on the
Seller and its Subsidiaries taken as a whole.

     3.6 DELIVERY OF SEC FILINGS; BUSINESS. The Seller has made available to the
Purchasers through the EDGAR system, true and complete copies of the Seller's
most recent Annual Report on Form 10-K for the fiscal year ended December 31,
2003 (the "10-K"), and all other reports filed by the Seller pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act") since the
filing of the 10-K and prior to the date hereof (collectively, the "SEC
Filings). The SEC Filings are the only filings required of the Seller pursuant
to the Exchange Act for such period. The Seller is engaged in all material
respects only in the business described in the SEC Filings and the SEC Filings
contain a complete and accurate description in all material respects of the
business of the Seller.

     3.7 SEC FILINGS. At the time of filing thereof, the SEC Filings complied as
to form in all material respects with the requirements of the Exchange Act and
did not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.

     3.8 FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES. The financial
statements included in each SEC Filing present fairly, in all material respects,
the consolidated financial position of the Seller as of the dates shown and its
consolidated results of operations and cash flows for the periods shown, and
such financial statements have been prepared in conformity with United States
generally accepted accounting principles applied on a consistent basis (except
as may be disclosed therein or in the notes thereto, and, in the case of
quarterly financial statements, as permitted by Form 10-Q under the Exchange
Act). Except (i) for liabilities incurred in connection with the Silipos
Acquisition (as defined below) or (ii) as set forth in the financial statements
of the Seller included in the SEC Filings filed prior to the date hereof, the
Seller has not incurred any liabilities, contingent or otherwise, except those
incurred in the ordinary course of business, consistent (as to amount and
nature) with past practices since the date of such financial statements, none of
which, individually or in the aggregate, have had or could reasonably be
expected to have a Material Adverse Effect on the Seller. For purposes of this
Agreement, "Silipos Acquisition" shall refer to proposed acquisition by the
Seller of all of the capital stock of Silipos, Inc., a Delaware corporation
("Silipos").

     3.9 COMPLIANCE WITH LAW. The Seller is in compliance in all respects and
has conducted its business so as to comply in all respects with all laws, rules
and regulations, judgments, decrees or orders of any court, administrative
agency, commission, regulatory authority or other governmental authority or
instrumentality, domestic or foreign, applicable to its operations except where
such non-compliance would not have a Material Adverse Effect on the Seller.

                                       5


     3.10 NO DEFAULTS. The Seller and its Subsidiaries are not, nor have they
received notice that they would be with the passage of time, giving of notice,
or both, in breach or violation of any of the terms and provisions of, or in
default under (a) their charters and bylaws, (b) any statute, rule, regulation
or order of any governmental agency or body or any court, domestic or foreign,
having jurisdiction over them, or any of their material assets or properties, or
(c) any material agreement or instrument to which they are a party or by which
they are bound or to which any of their assets or properties are subject,
except, in the case of clauses (b) and (c) only, for such conflicts, breaches or
violations as have not and could not reasonably be expected to result in,
individually or in the aggregate, a Material Adverse Effect on the Seller and
its Subsidiaries taken as a whole.

     3.11 LITIGATION. Except as disclosed in the SEC Filings, there is no
action, suit, proceeding, judgment, claim or investigation pending or, to the
best knowledge of the Seller, threatened against the Seller, which could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Seller or which in any manner challenges or seeks to
prevent, enjoin, alter or materially delay any of the transactions contemplated
hereby.

     3.12 TITLE TO PROPERTIES. Except as disclosed in the SEC Filings, the
Seller and its Subsidiaries have good and marketable title to all real
properties and all other properties and assets owned by them, in each case free
from liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or currently planned to be
made thereof by them; and except as disclosed in the SEC Filings, the Seller and
its Subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or currently planned to be made thereof by them.

     3.13 TAX RETURN AND PAYMENTS. The Seller has filed all tax returns required
by law to be filed by it and has paid all material taxes, assessments and other
governmental charges levied upon the Seller and any of its properties, assets,
income or franchises which are due and payable, other than those presently
payable without penalty or interest or those that are being contested in good
faith by appropriate proceedings promptly instituted and diligently conducted
and for which adequate reserves have been established on the books of the Seller
in accordance with generally accepted accounting principles. The charges,
accruals and reserves on the books of the Seller in respect of Federal, state
and foreign income taxes for all fiscal periods are adequate in the opinion of
the Seller, and the Seller has not been notified of any material unpaid
assessment for additional Federal, state or foreign income taxes for any period
or any basis for any such assessment for which adequate provision has not been
made in its accounts in accordance with generally accepted accounting
principles.

     3.14 BROKERS. Except for William Smith & Co., no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement,
based upon any arrangement made by or on behalf of the Seller.

                                       6


     3.15 SECURITIES LAWS. Neither the Seller nor any agent acting on behalf of
the Seller has taken or will taken any action which might cause this Agreement,
the Notes, the Warrants or the Warrant Shares to violate the Securities Act of
1933, as amended, (the "Securities Act") or the Exchange Act or any rules or
regulations promulgated thereunder, as in effect on the Closing Date. All offers
and sales of capital stock, securities, Notes and Warrants of the Seller were
conducted and completed in compliance with the Securities Act and all shares of
capital stock and other securities issued by the Seller prior to the date hereof
have been issued in transactions exempt from the registration requirements under
the Securities Act and all applicable state securities or "blue sky" laws and in
compliance with all applicable corporate laws.


                                   ARTICLE IV
                REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

         Each Purchaser, for itself, hereby severally represents and warrants to
the Seller as follows:

     4.1 EXISTENCE AND POWER. The Purchaser is duly organized, validly existing
and in good standing under the laws of the jurisdiction of such Purchaser's
organization. The Purchaser has all powers required to carry on such Purchaser's
business as now conducted.

     4.2 AUTHORIZATION. The execution, delivery and performance by the Purchaser
of this Agreement and the consummation by the Purchaser of the transactions
contemplated hereby have been duly authorized, and no additional action is
required for the approval of this Agreement. This Agreement has been duly
executed and delivered and constitutes the valid and binding agreement of the
Purchaser, enforceable against such Purchaser in accordance with its terms,
except as may be limited by bankruptcy, reorganization, insolvency, moratorium
and similar laws of general application relating to or affecting the enforcement
of rights of creditors and except that enforceability of their obligations
thereunder are subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).

     4.3 INVESTMENT. The Purchaser is acquiring the Notes, the Warrants and,
upon exercise of the Warrants, the Warrant Shares for its own account for
investment and not with a view to, or for sale in connection with, any
distribution thereof, nor with the intention of distribution or selling the
same; provided, however, that the Purchaser may transfer the Notes, the Warrants
and the Warrant Shares among one or more of its affiliates. The Purchaser is
aware neither the Notes, the Warrants not the Warrant Shares have been
registered under the Securities Act or under applicable state securities or
`blue sky' laws. The Purchaser is an "Accredited Investor" as such term is
defined in Rule 501 of Regulation D, as promulgated under the Securities Act.

     4.4 RELIANCE ON EXEMPTIONS. The Purchaser understands that the Notes, the
Warrants and the Warrant Shares are being offered and sold to such Purchaser in
reliance upon specific exemptions from the registration requirements of United
States federal and state securities laws and

                                       7


that the Seller is relying upon the truth and accuracy of, and such Purchaser's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of such Purchaser to acquire
the Notes, the Warrants, and the Warrant Shares.

     4.5 INVESTMENT EXPERIENCE. The Purchaser acknowledges that it can bear the
economic risk and complete loss of its investment in the Notes, the Warrants and
the Warrant Shares and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of the
investment contemplated hereby. The Purchaser understands that the purchase of
the Notes, the Warrants and the Warrant Shares involves substantial risk.

     4.6 DISCLOSURE OF INFORMATION. The Purchaser has had an opportunity to
receive all additional information related to the Seller requested by it and to
ask questions of and receive answers from the Seller regarding the terms and
conditions of the issuance and sale of the Notes, the Warrants and the Warrant
Shares, the terms and conditions of the Silipos Acquisition and the business,
properties, prospects and financial condition of each of the Seller and Silipos,
and to obtain any additional information requested. The Purchaser has received
and considered all information such Purchaser deems relevant to make an informed
decision to purchase the Notes, the Warrants and the Warrant Shares. The
Purchaser acknowledges receipt of copies of the SEC Filings, the summary of the
Silipos Acquisition prepared by the Seller, and definitive copies of the
principal agreements and documents relating to the Silipos Acquisition. Neither
such inquiries nor any other due diligence investigation conducted by the
Purchaser shall modify, amend or affect the Purchaser's right to rely on the
Seller's representations and warranties contained in this Agreement.

     4.7 NO GENERAL SOLICITATION. The Purchaser did not learn of the investment
in the Notes, the Warrants and the Warrant Shares by means of any form of
general or public solicitation or general advertising, or publicly disseminated
advertisements or sales literature, including (i) any advertisement, article,
notice or other communication published in any newspaper, magazine, or similar
media, or broadcast over television or radio, or (ii) any seminar or meeting to
which the Purchaser was invited by any of the foregoing means of communications.

     4.8 BROKERS AND FINDERS. Except for William Smith & Co., no Person will
have, as a result of the transactions contemplated by this Agreement, any valid
right, interest or claim against or upon the Seller or the Purchaser for any
commission, fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Purchaser.


                                    ARTICLE V
                             COVENANTS OF THE SELLER

     5.1 RESERVATION OF COMMON STOCK. The Seller shall at all times reserve and
keep available out of its authorized but unissued shares of Common Stock, solely
for the purpose of providing for the exercise of the Warrants, such number of
shares of Common Stock as shall from

                                       8


time to time equal the number of shares sufficient to permit the exercise of the
Warrants issued pursuant to this Agreement in accordance with their respective
terms.

     5.2 NO CONFLICTING AGREEMENTS. The Seller shall not take any action, enter
into any agreement or make any commitment that would conflict or interfere in
any material respect with the Seller's obligations to the Purchasers under this
Agreement, the Notes or the Warrants.

     5.3 COMPLIANCE WITH LAWS. The Seller shall comply in all material respects
with all applicable laws, rules, regulations, orders and decrees of all
governmental authorities.


     5.4 LISTING OF UNDERLYING SHARES AND RELATED MATTERS. If the Seller applies
to have its Common Stock or other securities traded on any stock exchange or
market, it shall include in such application the Warrant Shares and will take
such other action as is necessary to cause such shares of Common Stock to be so
listed.

     5.5 REPORTING OBLIGATIONS. (a) So long as any interest or principal of the
Notes is outstanding, and so long as any Warrant has not been exercised and has
not expired by its terms, the Seller shall furnish to the Purchasers, or any
other persons who hold any of the Notes or the Warrants (provided that such
holders give notice to the Seller that they hold Notes or the Warrants and
furnish their addresses) promptly upon their becoming available one copy of each
report, notice or proxy statement sent by the Seller to its stockholders
generally, and of each regular or periodic report (pursuant to the Exchange Act)
and any registration statement, prospectus or written communication (other than
transmittal letters) (pursuant to the Securities Act), filed by the Seller with
(i) the SEC or (ii) any securities exchange on which shares of Common Stock are
listed. The Purchasers are hereby authorized to deliver a copy of any financial
statement or any other information relating to the business, operations or
financial condition of the Seller which may have been furnished to the
Purchasers hereunder or otherwise, to any regulatory body or agency having
jurisdiction over the Purchasers or to any Person which has succeeded, or shall
have right or obligation to succeed, to all or any part of the Purchasers'
interest in the Seller or this Agreement.

         (b) The Seller agrees to maintain its registration pursuant to Section
12(g) of the Exchange Act and its listing on the Nasdaq Small Cap Market.

     5.6 INVESTIGATION. The representations, warranties, covenants and
agreements set forth in this Agreement shall not be affected or diminished in
any way by any investigation (or failure to investigate) at any time by or on
behalf of the party for whose benefit such representations, warranties,
covenants and agreements were made. Without limiting the generality of the
foregoing, the inability or failure of the Purchasers to discover any breach,
default or misrepresentation by the Seller under this Agreement, notwithstanding
the exercise by the Purchasers or other holders of the Notes of their rights
under this Agreement, shall not in any way diminish any liability hereunder.

                                       9


     5.7 USE OF PROCEEDS. The Seller covenants and agrees that the proceeds from
the sale of the Notes and the Warrants shall be used by the Seller to fund the
cash portion of the Silipos Acquisition by the Seller and for other general
working capital purposes, including the costs and expenses associated with the
Silipos Acquisition.

     5.8 CORPORATE EXISTENCE. The Seller shall preserve and maintain its
corporate existence and good standing in the jurisdiction of its incorporation
and the rights, privileges and franchises of the Seller except where such
failure to so preserve or maintain would not have a Material Adverse Effect on
the Seller.

     5.9 LICENSES. The Seller shall, maintain at all times all licenses or
permits necessary to the conduct of its business or as may be required by any
governmental agency or instrumentality thereof except where the failure to so
maintain would not have a Material Adverse Effect on the Seller.

     5.10 STOCKHOLDER APPROVAL. The Seller shall submit to its stockholders for
consideration no later than the 2005 Annual Meeting of Stockholders a proposal
to obtain stockholder approval to permit the issuance of Common Stock in an
amount exceeding twenty percent (20%) of the outstanding Common Stock on the
date of this Agreement (which amount shall include the Warrant Shares) in
satisfaction of Nasdaq Marketplace Rule 4350(i)(1)(D).

     5.11 PERFORM COVENANTS. The Seller shall (a) make full and timely payment
of any and all payments on the Notes, and all other indebtedness of the Seller
to the Purchasers, whether now existing or hereafter arising and (b) duly comply
with all the terms and covenants contained herein and in each of the instruments
and documents given to the Purchasers in connection with or pursuant to this
Agreement, all at the times and places and in the manner set forth herein or
therein.

     5.12 FURTHER ASSURANCES. The Seller shall, at its cost and expense, upon
written request of the Purchasers, duly execute and deliver, or cause to be duly
executed and delivered, to the Purchasers such further instruments and do and
cause to be done such further acts as may be necessary, advisable or proper, in
the absolute discretion of the Purchasers, to carry out more effectually the
provisions and purposes of this Agreement.


                                   ARTICLE VI
                             SUBORDINATION OF NOTES

     6.1 AGREEMENT TO BE BOUND. (a) The Seller covenants and agrees, and each
Purchaser and subsequent holder of Notes by his (its) acceptance thereof,
likewise covenants and agrees, that the Notes shall be issued subject to the
provisions contained in this Article VI; and each person holding any Notes,
whether upon original issue or upon transfer or assignment thereof, accepts and
agrees to be bound by such provisions.

                                       10


         (b) All Notes shall, to the extent and in the manner hereinafter set
forth, be subordinated and subject in right of payment to the prior payment in
full of all Senior Indebtedness (as defined in Section 6.7 herein).

     6.2 PRIORITY OF SENIOR INDEBTEDNESS. (a) No payment on account of principal
or interest on the Notes shall be made, nor shall any assets be applied to the
purchase or other acquisition or retirement of the Notes, if, at the time of
such payment or application or immediately after giving effect thereto, there
shall exist a default in the payment of any amount due on any Senior
Indebtedness. Within ten (10) Business Days after knowledge of any such default
referred to in this Section 6.2(a), the Seller shall furnish a copy thereof to
each holder of the Notes, in the manner and at the address specified pursuant to
Section 10.2 hereof.

         (b) If there shall have occurred an event of default (other than a
default in the payment of any amount due) with respect to any issue of Senior
Indebtedness or in the instrument under which the same has been issued,
permitting the holders thereof, after notice or lapse of time, or both, to
accelerate the maturity thereof, then, unless and until such event of default
shall have been cured or waived or shall have ceased to exist, no payment on
account of principal or interest on the Notes shall be made, nor shall any
assets be applied to the retirement of the Notes until the earliest to occur of
(i) 30 days after the date that notice of such default is given to the holders
of the Notes pursuant to the last sentence of this Section 6.2(b), or (ii) the
date on which the Senior Indebtedness to which such event of default related is
discharged in accordance with its terms, or (iii) the date such event of default
is waived by the holders of such Senior Indebtedness or otherwise cured. Within
ten (10) Business Days after knowledge of any such default referred to in this
Section 6.2(b), the Seller shall furnish a copy thereof to each holder of the
Notes, in the manner and at the address specified pursuant to Section 10.2
hereof.

         (c) Upon the occurrence and during the continuance of any Event of
Default under the Notes (as such term is defined in the Notes), or upon the
occurrence of an event described in Sections 6.2(a) or (b) which gives rise to
the non-payment of principal or interest due on the Notes, and notwithstanding
any other provision contained herein or in the Notes to the contrary, each
Purchaser hereby agrees, for the benefit of the holders of Senior Indebtedness,
not to ask for, demand, sue for, take or receive any amount owing under the
Notes or exercise any remedy (whether pursuant hereto, including, without
limitation, acceleration of the Notes, at law, in equity or otherwise) with
respect thereto until the earliest of (i) 30 days after (x) the occurrence of
such Event of Default or (y) the date that notice of such default is given to
the holders of the Notes pursuant to Sections 6.2(a) or (b), (ii) the date on
which all Senior Indebtedness is accelerated, (iii) if applicable, the date on
which the Senior Indebtedness to which such event of default related is
discharged in accordance with its terms or such event of default is waived by
the holders of such Senior Indebtedness or otherwise cured or (iv) any voluntary
or involuntary petition in bankruptcy filed by or against the Seller. Within ten
(10) Business Days after knowledge of any Event of Default under the Notes, the
Seller shall furnish a copy thereof to the

                                       11


holders of Senior Indebtedness in the manner and at the addresses specified in
the documents and/or agreements evidencing the applicable Senior Indebtedness.

     6.3 ACCELERATION OF NOTES; INSOLVENCY. (a) Upon (i) any acceleration of the
principal amount due on the Notes or Senior Indebtedness or (ii) any payment or
distribution of assets of the Seller of any kind or character, whether in cash,
property or securities, to creditors upon any dissolution or winding up or total
or partial liquidation or reorganization of the Seller, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, all
amounts due or to become due upon all Senior Indebtedness shall first be paid in
full, or payment thereof duly provided for, to the full satisfaction of the
holders of Senior Indebtedness before the holders of the Notes shall be entitled
to receive or retain any assets so paid or distributed in respect thereof; and
upon any such dissolution or winding up or liquidation or reorganization, any
payment or distribution of assets of the Seller of any kind or character,
whether in cash, property or securities, to which the holders of the Notes would
be entitled, except for these provisions, shall be paid by the Seller or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, or by the holders of the Notes if received
by them or it, as the case may be, directly to the holders of Senior
Indebtedness, to the extent necessary to pay all such Senior Indebtedness in
full, after giving effect to any concurrent payment or distribution to or for
the holders of Senior Indebtedness before any payment or distribution is made to
the holders of the Notes, except that the holders of Senior Indebtedness of the
type described in clause (i) of the definition of Senior Indebtedness shall be
entitled to receive payment in full of such Senior Indebtedness (or provisions
satisfactory to the holders of such Senior Indebtedness shall be made for such
payment) before the holders of other types of Senior Indebtedness shall be
entitled to receive payment on such other Senior Indebtedness.

         (b) In the event that, notwithstanding the provision of the preceding
paragraph or of Section 6.2 hereof, any payment or distribution of assets of the
Seller prohibited by the preceding paragraph or by Section 6.2 hereof shall be
received by the holders of the Notes before all Senior Indebtedness is paid in
full, or provision made for such payment, to the full satisfaction of the
holders of Senior Indebtedness, in accordance with its terms, such payment or
distribution shall be held in trust for the benefit of, and shall be paid over
or delivered to, the holders of Senior Indebtedness or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, for application to the payment of all
Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the holders of such Senior
Indebtedness. All payments applied to Senior Indebtedness pursuant to this
Section 6.3(b) shall be allocated among the holders of Senior Indebtedness in
accordance with the provisions of Section 6.3(a).

     6.4 SUBROGATION, ETC. Upon payment in full of all Senior Indebtedness, the
holders of the Notes shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments

                                       12


or distributions of assets of the Seller pro rata in proportion to the
respective amounts then owing to the holders of the Notes; and for purposes of
such subrogation, no payments or distributions to the holders of Senior
Indebtedness of any cash, property or securities to which the holders of Notes
would be entitled except for the provisions of this Article VI, and no payment
over pursuant to such provisions to the holders of Senior Indebtedness, shall,
as between the Seller and its creditors (other than the holders of the Notes and
the holders of the Senior Indebtedness), be deemed to be a payment by the Seller
to or on account of Senior Indebtedness, it being understood that the provisions
of this Article VI are, and are intended to be, solely for the purpose of
defining the relative rights of the holders of the Notes on the one hand and the
holders of Senior Indebtedness on the other hand. The holders of Senior
Indebtedness may amend, modify and otherwise deal with Senior Indebtedness
without any notice to or approval of any holder of Indebtedness ranking junior
to Senior Indebtedness.

     6.5 ENFORCEMENT. (a) The foregoing subordination provisions shall be for
the benefit of the holders of Senior Indebtedness and may be enforced directly
by such holders against the holders of the Notes. Each holder of Notes by his
(or its) acceptance thereof shall be deemed to acknowledge and agree that the
subordination provisions of this Article VI are, and are intended to be, an
inducement and a consideration to each holder of any Senior Indebtedness,
whether such Senior Indebtedness was created or acquired before or after the
issuance of the Notes, to acquire and continue to hold, or to continue to hold,
such Senior Indebtedness and each holder of Senior Indebtedness shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Indebtedness.

         (b) Upon any payment or distribution of assets of the Seller, the
holders of the Notes shall be entitled to rely upon a certificate of the
receiver, trustee in bankruptcy, liquidation trustee, Seller, agent or other
person making such payment or distribution, delivered to the holders of the
Notes, for the purpose of ascertaining the persons entitled to participate in
such distribution, the holders of the Senior Indebtedness and other indebtedness
of the Seller, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertaining thereto or to the
provisions of this Article VI.

     6.6 OBLIGATIONS UNIMPAIRED. Nothing contained in this Article VI, or
elsewhere in this Agreement, or in the Notes, is intended to or shall impair as
between the Seller, its creditors other than the holders of Senior Indebtedness,
and the holders of the Notes, the obligation of the Seller, which shall be
absolute and unconditional, to pay the holders of the Notes the principal of and
interest on the Notes as and when the same shall become due and payable in
accordance with the terms thereof, or affect the relative rights of the holders
of the Notes and other creditors of the Seller other than the holders of Senior
Indebtedness, nor shall anything herein or therein prevent the holder of any
Notes from exercising all remedies otherwise permitted by applicable law upon
default under this Agreement, subject to the rights, if any, under this Article
VI of the holders of Senior Indebtedness in respect to cash, property or
securities of the Seller received upon the

                                       13


exercise of any such remedy. Nothing contained in this Article VI or elsewhere
in this Agreement, or in any of the Notes, shall prevent the Seller from making
payment of the principal of or interest on the Notes at any time except under
the conditions described in Section 6.2 or 6.3 or during the pendency of any
dissolution, winding up, liquidation or reorganization of the Seller.

     6.7 DEFINITION OF SENIOR INDEBTEDNESS. The term "Senior Indebtedness" shall
mean the principal and interest on (i) all Indebtedness of the Seller and its
Subsidiaries for money borrowed from time to time, including that owing to banks
or other financial institutions, an agency or agencies of the federal government
or other institutions engaged in the business of lending money, (ii) obligations
of the Seller for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction, (iii) any future senior
secured Indebtedness of the Seller (such senior secured Indebtedness to be
limited to asset-based working capital facilities or term loans for purposes of
funding ongoing working capital and liquidity requirements of the Seller) and
(iv) any deferrals, renewals and extensions of any indebtedness described in
clauses (i) through (iii) above, unless under the express provisions of the
instrument creating or evidencing any such indebtedness, or pursuant to which
the same is outstanding, such indebtedness is not superior in right of payment
to the Notes; provided, however, that Senior Indebtedness shall not include
Indebtedness owed or owing to any Subsidiary or any officer, director or
employee of the Seller or any Subsidiary. For purposes of this Agreement,
"Indebtedness" of any person means and includes, without duplication, as of any
date as of which the amount thereof is to be determined, (i) all obligations of
such person to repay money borrowed (including, without limitation, all
debentures payable and drafts accepted representing extensions of credit, all
obligations evidenced by bonds, debentures or other similar instruments and all
obligations upon which interest charges are customarily paid), (ii) the value of
all capital leases (as such term is defined in accordance with generally
accepted accounting principles in effect on the date of this Agreement) in
respect of which such person is liable as lessee or as the guarantor of the
lessee, (iii) the principal amount of all monetary obligations which are secured
by any lien or security interest existing on property owned by such person
whether or not the obligations secured thereby shall have been assumed by such
person, (iv) all guaranties of the Indebtedness of any other person and (v) all
amounts from time to time owing to trade creditors arising in the ordinary
course of such person's business.


                                   ARTICLE VII
                               REGISTRATION RIGHTS

     7.1 OBLIGATIONS TO REGISTER. The Seller agrees to use its best efforts to
file with the SEC no later than December 31, 2005, a registration statement for
an offering to be made on a continuous or delayed basis pursuant to Rule 415
under the Securities Act covering all of the Warrant Shares. Such registration
statement shall be on Form S-3 under the Securities Act, if such Form is then
available for use by the Seller, or another appropriate form that is available
to the Seller permitting registration of such Warrant Shares for resale by the
holders of the Warrant Shares ("Holders") in the manner or manners reasonably
designated by them (including, without

                                       14


limitation, one or more underwritten offerings). The Seller shall use its best
efforts to cause such registration statement to be declared effective pursuant
to the Securities Act as promptly as practicable following the filing thereof,
and, subject to applicable laws, rules and orders, to keep such registration
statement continuously effective under the Securities Act until the Holders are
permitted to sell the Warrant Shares pursuant to Rule 144(k) of the Securities
Act, or such shorter period ending when there cease to be outstanding any
Warrants or Warrant Shares held by the Holders. Notwithstanding the foregoing,
the Holders acknowledge that in connection with the Seller's contemplated
acquisition strategy, the Seller may file a registration statement relating to
shares of Common Stock to be issued in connection with such acquisition. In such
event, if the Board of Directors of the Seller reasonably determines that the
Seller will be filing a registration statement under the Securities Act in
connection with an acquisition, then any registration statement required to be
filed by this Section 7.1 may be temporarily delayed at the discretion of the
Seller's Board of Directors, and the Warant Shares which would have been
otherwise included in such registration statement shall be included in the
Seller's registration statement to be filed in connection with the contemplated
acquisition, so that the Seller would not be required to file more than one
registration statement in any consecutive six-month period; provided, however,
that the provisions of this sentence shall not be applicable, and the Seller
shall not be permitted to delay the filing of a registration statement
registering the Warrant Shares, in the event that the Seller proposes, in
connection with any such acquisition, to use a registration statement on Form
S-4 or any successor form thereto.

     7.2 TERMS AND CONDITIONS OF REGISTRATION. Except as otherwise provided
herein, in connection with any registration statement filed pursuant to Sections
7.1, the following provisions shall apply:

         (a) If requested by the Holder(s) in connection with a registration
statement filed pursuant to Sections 7.1, the Seller will enter into an
underwriting agreement with the underwriters for such offering, such agreement
to be reasonably satisfactory in form and substance to the Seller, the Holder(s)
and the underwriters, and to contain such representations, warranties and
covenants by the Seller and such other terms as are customarily contained in
such agreements used by the managing underwriter, including, without limitation,
restrictions of sales of Common Stock or other securities by the Seller as may
be reasonably agreed to between the Seller and such underwriters. The Holders
shall be a party to any underwriting agreement relating to an underwritten sale
of their Warrant Shares and may, at their option, require that any or all of the
representations, warranties and covenants of the Seller to or for the benefit of
such underwriters, shall also be made to and for the benefit of the Holders. All
representations and warranties of the Holders shall be made to or for the
benefit of the Seller.

         (b) The Seller shall provide a transfer agent and registrar (which may
be the same entity) for the Warrant Shares, not later than the effective date of
such registration.

                                       15


         (c) All expenses in connection with the preparation and filing of a
registration statement filed pursuant to Section 7.1 shall be borne solely by
the Seller, except for any transfer taxes payable with respect to the
disposition of such Warrant Shares, and any underwriting discounts and selling
commissions applicable solely to such sales of Warrant Shares, which shall be
paid by the Holders of the Warrant Shares being registered.

         (d) The Seller shall use its best efforts to cause all of the shares
covered by such registration statement to be listed on NASDAQ or such other
exchange as the Warrant Shares may then be listed on, on which similar shares
are listed for trading, if the listing of such registered shares is permitted by
such exchange.

         (e) Following the effective date of such registration statement, the
Seller shall, upon the request of the Holders, forthwith supply such number of
prospectuses (including exhibits thereto and preliminary prospectuses and
amendments and supplements thereto) meeting the requirements of the Securities
Act and such other documents as are referred to in the prospectus as shall be
reasonably requested by the Holders to permit the Holders to make a public
distribution of their Warrant Shares.

         (f) The Seller shall prepare, if necessary, and file such amendments
and supplements to such registration statement filed pursuant to Section 7.1
hereof, as may be necessary to keep such registration statement effective,
subject to applicable laws, rules and orders, until the Holders are permitted to
sell the Warrant Shares pursuant to Rule 144(k) of the Securities Act, or such
shorter period ending when there cease to be outstanding any Warrants or Warrant
Shares held by the Holders, and to comply with the provisions of the Securities
Act with respect to the offer and sale or other disposition of the shares
covered by such registration statement during the period required for
distribution of the shares.

         (g) The Holders may select the underwriter or underwriters, if any, who
are to undertake any offering and distribution of the Shares to be included in a
registration statement filed under the provisions of Section 7.1, subject to the
Seller's prior approval of the underwriter or underwriters.

         (h) The Seller shall use its best efforts to register the Warrant
Shares covered by any such registration statements filed pursuant to Section 7.1
under such securities or "blue sky" laws in addition to those in which the
Seller would otherwise sell shares, as the Holders reasonably request, except
that neither the Seller nor the Holders shall for any such purpose be required
to execute a general consent to service of process or to qualify to do business
as a foreign corporation in any jurisdiction where it is not so qualified. The
fees and expenses incurred in connection with such registration shall be borne
by the Sellers.

         (i) The Holders shall cooperate fully with the Seller and provide the
Seller with all information reasonably requested by the Seller for inclusion in
the registration statement or as

                                       16


necessary to comply with the Securities Act. The Seller shall cooperate fully
with any underwriters selected by the Holders and counsel to such underwriters,
and shall provide reasonable and customary access to the Seller's books and
records (upon receipt from such underwriters of customary confidentiality
agreements) in order to facilitate such underwriters' review and examination of
the Seller in connection with such underwriting.

         (j) The Seller shall notify the Holders, at any time after
effectiveness when a prospectus relating thereto is required to be delivered
under the Securities Act within the period mentioned in subdivision (f) of this
Section 7.2, of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of circumstances then existing (and upon receipt of such notice and until
a supplemented or amended prospectus as set forth below is available, the
Holders shall not offer or sell any securities covered by such registration
statement and shall return all copies of such prospectus to the Seller if
requested to do so by it), and at the request of the Holders prepare and furnish
the Holders promptly a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing.

         (k) The Seller shall furnish to the Holders at the time of the
disposition of the Warrant Shares, a signed copy of an opinion of the Seller's
regular in-house or outside general counsel, or other counsel of the Seller's
selection reasonably acceptable to, and which opinion shall be reasonably
satisfactory in form and substance to, the Holders to the effect that: (a) a
registration statement covering such Warrant Shares has been filed with the SEC
under the Securities Act and has been made effective by order of the SEC, (b)
said registration statement and prospectus contained therein comply as to form
in all material respects with the requirements of the Securities Act, and
nothing has come to such counsel's attention (after due inquiry) which would
cause such counsel to believe that either said registration statement or such
prospectus contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein (in the case of such prospectus, in light of the circumstances under
which they were made) not misleading, (c) after due inquiry such counsel knows
of no legal or governmental proceedings required to be described in such
registration statement or prospectus which are not described as required, or of
any contracts or documents of a character required to be described in such
registration statement or such prospectus to be filed as an exhibit to such
registration statement or to be incorporated by reference therein which are not
described and filed as required and (d) to such counsel's knowledge, no stop
order has been issued by the SEC suspending the effectiveness of such
registration statement; it being understood that such opinion may contain such
qualifications and assumptions as are customary in the rendering of similar
opinions, and that such counsel may


                                       17


rely, as to all factual matters treated therein, on certificates of the Seller
(copies of which shall be delivered to the Holders).

         (l) The Seller will use its best efforts to comply with the reporting
requirements of Sections 13 and 15(d) of the Exchange Act, to the extent it
shall be required to do so pursuant to such sections, and at all times while so
required shall use its best efforts to comply with all other public information
reporting requirements of the SEC (including reporting requirements which serve
as a condition to utilization of Rule 144 promulgated by the SEC under the
Securities Act) from time to time in effect and relating to the availability of
an exemption from the Securities Act for the sale of any shares of Common Stock
held by the Holders. The Seller will also cooperate with the Holders in
supplying such information and documentation as may be necessary for the Holders
to complete and file any information reporting forms presently or hereafter
required by the SEC as a condition to the availability of an exemption from the
Securities Act for the sale of any Common Stock held by the Holders.


                                  ARTICLE VIII
                            CONDITIONS TO THE CLOSING

     8.1 CONDITIONS TO OBLIGATIONS OF THE PURCHASERS. The obligations of the
Purchasers are subject to the fulfillment or satisfaction, on and as of the date
of the Closing (the "Closing Date") except as otherwise expressly indicated
below or in Section 1.3 hereof, of each of the following conditions (any one or
more of which may be waived by the Purchasers in their sole discretion, but only
in a writing signed by the Purchasers):

         (A) OPINION. The Purchasers shall have received the opinion of Seller's
Counsel, in form and substance satisfactory to the Purchasers.

         (B) SECRETARY'S CERTIFICATE. The Purchasers shall have received a
certificate of the Secretary of the Seller dated as of the Closing Date,
certifying the resolutions adopted by the Board of Directors of the Seller
approving the transactions contemplated by this Agreement and the issuance of
the Notes and the Warrants, certifying the current versions of the Certificate
of Incorporation and Bylaws of the Seller and certifying as to the signatures
and authority of persons signing this Agreement, the Notes and the Warrants on
behalf of the Seller.

         (C) OFFICER'S CERTIFICATE. The Purchasers shall have received a
Certificate, executed on behalf of the Seller by its Chief Executive Officer or
its Chief Financial Officer, dated as of the Closing Date, certifying to the
fulfillment of the condition specified in Section 8.1(e).

         (D) NOTES, WARRANTS. The Seller shall have executed and delivered the
Notes in the form of Exhibit A attached hereto, and certificates evidencing the
Warrants in the form of Exhibit B attached hereto, to the Purchasers, in the
amounts as provided in Section 2.3.

                                       18


         (E) PERFORMANCE; REPRESENTATION AND WARRANTIES. The Seller shall have
performed and complied in all respects with all agreements and conditions
contained in this Agreement which are required to be performed or complied with
by the Seller prior to or at the Closing, the representation and warranties of
the Seller contained herein shall be true and correct on and as of the Closing
Date as though made on such date, and the Seller shall have delivered to the
Purchasers a certificate of a duly authorized officer of the Seller to such
effect.

         (F) APPROVALS, ETC. Approval and consent of all appropriate
governmental regulatory agencies and the receipt of approval and/or consent from
all other appropriate parties, and all consents which may be required under any
of the Seller's agreements (or otherwise), with respect to the transactions
contemplated hereby shall have been obtained.

         (G) NO LITIGATION. No litigation, arbitration or other legal or
administrative proceeding against the Seller shall have been commenced or be
pending by or before any court, arbitration panel or governmental authority or
official, and no statute, rule or regulation of any foreign or domestic,
national or local government or agency thereof shall have been enacted after the
date of this Agreement, and no judicial or administrative decision shall have
been rendered which enjoins or prohibits, or seeks to enjoin or prohibit, the
consummation of all or any of the transactions contemplated by this Agreement.

     8.2 CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligations of the Seller
hereunder are subject to the fulfillment or satisfaction, on and as of the
Closing Date, of the following condition (which may be waived by the Seller, in
its sole discretion, but only in a writing signed by the Seller):

         (A) PERFORMANCE; REPRESENTATION AND WARRANTIES. The Purchasers shall
have performed and complied in all respects with all agreements and conditions
contained in this Agreement which are required to be performed or complied with
by the Purchasers prior to or at the Closing, the representation and warranties
of the Purchasers contained herein shall be true and correct on and as of the
Closing Date as though made on such date, and the Purchasers shall have
delivered to the Seller a certificate of a duly authorized officer of the
Purchasers to such effect.

         (B) NO LITIGATION. No litigation, arbitration or other legal or
administrative proceeding against the Purchasers shall have been commenced or be
pending by or before any court, arbitration panel or governmental authority or
official, and no statute, rule or regulation of any foreign or domestic,
national or local government or agency thereof shall have been enacted after the
date of this Agreement, and no judicial or administrative decision shall have
been rendered which enjoins or prohibits, or seeks to enjoin or prohibit, the
consummation of all or any of the transactions contemplated by this Agreement.


                                       19


                                   ARTICLE IX
                         INDEMNIFICATION AND TERMINATION

     9.1 SURVIVAL OF REPRESENTATIONS; INDEMNITY; PURCHASERS' LIABILITY.

         (A) SURVIVAL OF REPRESENTATIONS. Except as otherwise provided herein,
the representations, warranties, covenants and agreements of the Seller and the
Purchasers contained in or made pursuant to this Agreement shall survive the
Closing of the transactions contemplated by this Agreement for a period of three
(3) months after the Closing.

         (B) INDEMNIFICATION. (i) The Seller agrees to indemnify and hold
harmless the Purchasers, their affiliates, each of their officers, directors,
employees and agents and their respective successors and assigns, from and
against any losses, damages, or expenses which are caused by or arise out of (A)
any breach or default in the performance by the Seller of any covenant or
agreement made by the Seller in this Agreement, the Notes or the Warrants; (B)
any breach of warranty or representation made by the Seller in this Agreement or
in any of the agreements or documents referred to in this Agreement and (C) any
and all actions, suits, proceedings, claims, demands, judgments, costs and
expenses (including reasonable legal fees and expenses) incident to any of the
foregoing.

             (ii) The Purchasers, severally and not jointly, agree to indemnify
and hold harmless the Seller, its affiliates, and its respective successors and
assigns, from and against any losses, damages, or expenses which are caused by
or arise out of (A) any breach or default in the performance by the Purchasers
of any covenant or agreement made by the Purchasers in this Agreement; (B) any
breach of warranty or representation made by the Purchasers in this Agreement;
and (C) any and all actions, suits, proceedings, claims, demands, judgments,
costs and expenses (including reasonable legal fees and expenses) incident to
any of the foregoing.

         (C) INDEMNITY PROCEDURE. A party or parties hereto agreeing to be
responsible for or to indemnify against any matter pursuant to this Agreement is
referred to herein as the "Indemnifying Party" and the other party or parties
claiming indemnity is referred to as the "Indemnified Party".

             An Indemnified Party under this Agreement shall, with respect to
claims asserted against such party by any third party, give written notice to
the Indemnifying party of any liability which might give rise to a claim for
indemnity under this Agreement within sixty (60) business days of the receipt of
any written claim from any such third party, but not later than twenty (20) days
prior to the date any answer or responsive pleading is due, and with respect to
other matters for which the Indemnified Party may seek indemnification, give
prompt written notice to the Indemnifying party of any liability which might
give rise to a claim for indemnity; provided, however, that any failure to give
such notice will not waive any rights of the Indemnified Party except to the
extent the rights of the Indemnifying Party are materially prejudiced.

                                       20


             The Indemnifying Party shall have the right, at its election, to
take over the defense or settlement of such claim by giving written notice to
the Indemnified Party at least fifteen (15) days prior to the time when an
answer or other responsive pleading or notice with respect thereto is required.
If the Indemnifying Party makes such election, it may conduct the defense of
such claim through counsel of its choosing (subject to the Indemnified Party's
approval of such counsel, which approval shall not be unreasonably withheld),
shall be solely responsible for the expenses of such defense and shall be bound
by the results of its defense or settlement of the claim. The Indemnifying Party
shall not settle any such claim without prior notice to and consultation with
the Indemnified Party, and no such settlement involving any equitable relief or
which might have an adverse effect on the Indemnified Party may be agreed to
without the written consent of the Indemnified Party (which consent shall not be
unreasonably withheld). So long as the Indemnifying Party is diligently
contesting any such claim in good faith, the Indemnified Party may pay or settle
such claim only at its own expense and the Indemnifying Party will not be
responsible for the fees of separate legal counsel to the Indemnified Party,
unless the named parties to any proceeding include both parties and
representation of both parties by the same counsel would be inappropriate. If
the Indemnifying Party does not make such election, or having made such election
does not, in the reasonable opinion of the Indemnified Party proceed diligently
to defend such claim, then the Indemnified Party may (after written notice to
the Indemnifying Party), at the expense of the Indemnifying Party, elect to take
over the defense of and proceed to handle such claim in its discretion and the
Indemnifying Party shall be bound by any defense or settlement that the
Indemnified Party may make in good faith with respect to such claim. In
connection therewith, the Indemnifying Party will fully cooperate with the
Indemnified Party should the Indemnified Party elect to take over the defense of
any such claim.

             The parties agree to cooperate in defending such third party claims
and the Indemnified Party shall provide such cooperation and such access to its
books, records and properties as the Indemnifying Party shall reasonably request
with respect to any matter for which indemnification is sought hereunder; and
the parties hereto agree to cooperate with each other in order to ensure the
proper and adequate defense thereof.

             With regard to claims of third parties for which indemnification is
payable hereunder, such indemnification shall be paid by the Indemnifying Party
upon the earlier to occur of: (i) the entry of a judgment against the
Indemnified Party and the expiration of any applicable appeal period, or if
earlier, five (5) days prior to the date that the judgment creditor has the
right to execute the judgment; (ii) the entry of an unappealable judgment or
final appellate decision against the Indemnified Party; or (iii) a settlement of
the claim. Notwithstanding the foregoing, the reasonable expenses of counsel to
the Indemnified Party shall be reimbursed on a current basis by the Indemnifying
Party if such expenses are a liability of the Indemnifying Party. With regard to
other claims for which indemnification is payable hereunder, such
indemnification shall be paid promptly by the Indemnifying Party upon demand by
the Indemnified Party.

                                       21



                                    ARTICLE X
                                  MISCELLANEOUS

     10.1 FURTHER ASSURANCES. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurances as may be reasonably requested by
any other party to better evidence and reflect the transactions described herein
and contemplated hereby and to carry into effect the intents and purposes of
this Agreement.

     10.2 NOTICES. Whenever any party hereto desires or is required to give any
notice, demand, or request with respect to this Agreement, each such
communication shall be in writing and shall be effective only if it is delivered
by personal service or mailed, United States registered or certified mail,
postage prepaid, return receipt requested (and shall be deemed to have been
received three(3) days after deposit into the United States mail), or sent by
prepaid overnight courier, facsimile or confirmed telecopier, addressed as
follows:

- --------------------------------------------------------------------------------
If to the Purchasers:                   If to the Seller:
to the addresses set forth opposite     Langer, Inc.
the respective Purchasers names on      450 Commack Road
the signature pages hereto              Deer Park, NY 11729
                                        Attn: Chief Executive Officer
                                        Facsimile: (631) 667-1203
- --------------------------------------------------------------------------------
                                        With a copy in each case to:
                                        Kane Kessler, P.C.
                                        1350 Avenue of the Americas - 26th Floor
                                        New York, New York 10019
                                        Attention: Robert L. Lawrence, Esq.
                                        Fax No.: (212) 245-3009
- --------------------------------------------------------------------------------

Unless otherwise stated above, such communications shall be effective when they
are received by the addressee thereof in conformity with this Section. Any party
may change its address for such communications by giving notice thereof to the
other parties in conformity with this Section.

     10.3 GOVERNING LAW. This Agreement has been entered into and shall be
construed and enforced in accordance with the laws of the State of New York
without reference to the choice of law principles thereof.

     10.4 JURISDICTION AND VENUE. This Agreement shall be subject to the
exclusive jurisdiction of the Federal District Court, Southern District of New
York and if such court does not have proper jurisdiction, the State Courts of
New York County, New York. The parties to this Agreement

                                       22


agree that any breach of any term or condition of this Agreement shall be deemed
to be a breach occurring in the State of New York by virtue of a failure to
perform an act required to be performed in the State of New York and irrevocably
and expressly agree to submit to the jurisdiction of the Federal District Court,
Southern District of New York and if such court does not have proper
jurisdiction, the State Courts of New York County, New York for the purpose of
resolving any disputes among the parties relating to this Agreement or the
transactions contemplated hereby. The parties irrevocably waive, to the fullest
extent permitted by law, any objection which they may now or hereafter have to
the laying of venue of any suit, action or proceeding arising out of or relating
to this Agreement, or any judgment entered by any court in respect hereof
brought in New York County, New York, and further irrevocably waive any claim
that any suit, action or proceeding brought in Federal District Court, Southern
District of New York and if such court does not have proper jurisdiction, the
State Courts of New York County, New York has been brought in an inconvenient
forum.

     10.5 SUCCESSORS AND ASSIGNS. This Agreement is personal to each of the
parties and may not be assigned without the written consent of the other
parties; provided, however, that any of the Purchasers shall be permitted to
assign their rights under this Agreement to any affiliate of such Purchaser.

     10.6 SEVERABILITY. If any provision of this Agreement, or the application
thereof, shall for any reason or to any extent be invalid or unenforceable, the
remainder of this Agreement and application of such provision to other persons
or circumstances shall continue in full force and effect and in no way be
affected, impaired or invalidated.

     10.7 ENTIRE AGREEMENT. This Agreement and the other agreements and
instruments referenced herein constitute the entire understanding and agreement
of the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings.

     10.8 OTHER REMEDIES. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party shall be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law, or in equity
on such party, and the exercise of any one remedy shall not preclude the
exercise of any other.

     10.9 AMENDMENT AND WAIVERS. Any term or provision of this Agreement or the
Notes may be amended, and the observance of any term of this Agreement or the
Notes may be waived (either generally or in a particular instance and either
retroactively or prospectively) only by a writing signed by the Seller and the
holders of a majority of the outstanding principal amount of the Notes;
provided, however, that without the consent of each holder of a Note affected,
an amendment, waiver or supplement may not (i) extend the final maturity of this
Note; (ii) reduce the principal amount of this Note; (iii) reduce the rate or
extend the time of payment of any interest on this Note; (iv) impair or affect
the right of any Holder of any Note to institute suit for the payment of a Note;
or (v) change the currency for payment of principal of, premium, if any, or
interest on, this Note; and further,

                                       23


provided, however, that an amendment, waiver or supplement may not reduce the
percentage of Notes, the consent of the Holders of which is required for any
such amendment or waiver, without the consent of the holders of all Notes then
outstanding.. The waiver by a party of any breach hereof or default in the
performance hereof shall not be deemed to constitute a waiver of any other
default or any succeeding breach or default.

     10.10 NO WAIVER. The failure of any party to enforce any of the provisions
hereof shall not be construed to be a waiver of the right of such party
thereafter to enforce such provisions.

     10.11 CONSTRUCTION OF AGREEMENT; KNOWLEDGE. For purposes of this Agreement,
the term "knowledge," when used in reference to a corporation means the
knowledge of the officers of such corporation assuming such officers shall have
made inquiry that is customary and appropriate under the circumstances to which
reference is made, and when used in reference to an individual means the
knowledge of such individual assuming the individual shall have made inquiry
that is customary and appropriate under the circumstances to which reference is
made.

     10.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original as against any party whose
signature appears thereon and all of which together shall constitute one and the
same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as signatories.

     10.13 NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and permitted assigns, any
rights or remedies under or by reason of this Agreement.


                                       24


     IN WITNESS WHEREOF, the parties have executed this Agreement or caused
their duly authorized officers to execute this Agreement as of the date first
above written.

The Seller:                            LANGER, INC.



                                       By: /s/ Andrew H. Meyers
                                           --------------------
                                       Name: Andrew H. Meyers
                                       Title: President and Chief Executive
                                              Officer







The Purchasers:

                                       WYNNEFIELD PARTNERS SMALL CAP VALUE, LP I

                                       By:


                                       By: /s/ Nelson Obus
                                           ---------------
                                       Name: Nelson Obus
                                       Title: Managing Member


                                            Nelson Obus
                                            450 7th Avenue
                                            Suite 509
                                            New York, NY 10123
                                            Phone: (212) 760-0134
                                            Fax:
                                            Email:

                                            Peter Black
                                            450 7th Avenue
                                            Suite 509
                                            New York, NY 10123
                                            Phone: (212) 760-0742
                                            Fax:
                                            Email: pblack@wynnefieldcapital.com

                                            with a copy to:

                                            ------------------------

                                            ------------------------

                                            Attn:                 , Esq.
                                                 -----------------
                                            Telephone:
                                                      -----------------
                                            Facsimile:
                                                      -----------------
                                            Email:




                                       WYNNEFIELD PARNTERS SMALL CAP VALUE, LP

                                       By:


                                       By: /s/ Nelson Obus
                                           ---------------
                                       Name: Nelson Obus
                                       Title: Managing Member


                                            Nelson Obus
                                            450 7th Avenue
                                            Suite 509
                                            New York, NY 10123
                                            Phone: (212) 760-0134
                                            Fax:
                                            Email:

                                            Peter Black
                                            450 7th Avenue
                                            Suite 509
                                            New York, NY 10123
                                            Phone: (212) 760-0742
                                            Fax:
                                            Email: pblack@wynnefieldcapital.com

                                            with a copy to:

                                            ------------------------

                                            ------------------------
                                            Attn:                  , Esq.
                                                  -----------------
                                            Telephone:
                                                      -----------------
                                            Facsimile:
                                                      -----------------
                                            Email:




                                       WYNNEFIELD PARTNERS SMALL CAP VALUE
                                       OFFSHORE FUND, LTD.

                                       By:


                                       By: /s/ Nelson Obus
                                           ---------------
                                       Name: Nelson Obus
                                       Title: President


                                            Nelson Obus
                                            450 7th Avenue
                                            Suite 509
                                            New York, NY 10123
                                            Phone: (212) 760-0134
                                            Fax:
                                            Email:

                                            Peter Black
                                            450 7th Avenue
                                            Suite 509
                                            New York, NY 10123
                                            Phone: (212) 760-0742
                                            Fax:
                                            Email: pblack@wynnefieldcapital.com


                                            with a copy to:

                                            ------------------------

                                            ------------------------
                                            Attn:                  , Esq.
                                                  -----------------
                                            Telephone:
                                                      -----------------
                                            Facsimile:
                                                      -----------------
                                            Email:




                                       AMGUARD INSURANCE COMPANY

                                       By: /s/ Jeffrey E. Picker
                                           ---------------------
                                       Name: Jeffrey E. Picker
                                       Title: Treasurer


                                            Jeffrey E. Picker
                                            16 S. River Street
                                            Wilkes-Barre, PA 18702
                                            Phone: (570) 825-9900 x1024
                                            Fax:
                                                -----------------
                                            Email: jpicker@guard.com

                                            with a copy to:

                                            ------------------------

                                            ------------------------
                                            Attn:                  , Esq.
                                                  -----------------
                                            Telephone:
                                                      -----------------
                                            Facsimile:
                                                      -----------------
                                            Email:



                                       NORGUARD INSURANCE COMPANY

                                       By: /s/ Jeffrey E. Picker
                                           ---------------------
                                       Name: Jeffrey E. Picker
                                       Title: Treasurer


                                            Jeffrey E. Picker
                                            16 S. River Street
                                            Wilkes-Barre, PA 18702
                                            Phone: (570) 825-9900 x1024
                                            Fax:
                                                -----------------
                                            Email: jpicker@guard.com

                                            with a copy to:

                                            ------------------------

                                            ------------------------
                                            Attn:                  , Esq.
                                                  -----------------
                                            Telephone:
                                                      -----------------
                                            Facsimile:
                                                      -----------------
                                            Email:




                                       GLOBIS CAPITAL PARNTERS, L.P


                                       By: /s/ Paul Packer
                                           -------------------
                                       Name: Paul Packer
                                       Title: Managing Member


                                            Paul Packer
                                            60 Broad Street
                                            38th Floor
                                            New York, NY 10004
                                            Phone: (212) 847-3248
                                            Fax:
                                                -----------------
                                            Email: paul@globiscapital.com

                                            with a copy to:

                                            ------------------------

                                            ------------------------
                                            Attn:                  , Esq.
                                                  -----------------
                                            Telephone:
                                                      -----------------
                                            Facsimile:
                                                      -----------------
                                            Email:





                                       GLOBIS OVERSEAS FUND, LTD.


                                       By: /s/ Paul Packer
                                           ---------------
                                       Name: Paul Packer
                                       Title: Director


                                            Paul Packer
                                            60 Broad Street
                                            38th Floor
                                            New York, NY 10004
                                            Phone: (212) 847-3248
                                            Fax:
                                                -----------------
                                            Email: paul@globiscapital.com


                                            with a copy to:

                                            ------------------------

                                            ------------------------
                                            Attn:                  , Esq.
                                                  -----------------
                                            Telephone:
                                                      -----------------
                                            Facsimile:
                                                      -----------------
                                            Email:





                                       DAVOS PARTNERS, L.P.


                                       /s/ David Nolan
                                       ---------------
                                       Name: David Nolan


                                            David Nolan
                                            666 Fifth Avenue
                                            8th Floor
                                            New York, NY 10152
                                            Phone: (212) 841-4209
                                            Fax:
                                                -----------------
                                            Email: dnolan@mlp.com

                                            with a copy to:

                                            ------------------------

                                            ------------------------
                                            Attn:                  , Esq.
                                                  -----------------
                                            Telephone:
                                                      -----------------
                                            Facsimile:
                                                      -----------------
                                            Email:



                                       CHARLES V. MOORE


                                       /s/ Charles V. Moore
                                       --------------------


                                            Charles V. Moore
                                            1230 Avenue of the Americas
                                            2nd Floor
                                            New York, NY 10020
                                            Phone: (212) 759-7755
                                            Fax:
                                                -----------------
                                            Email: cmoore@trainerwortham.com


                                            with a copy to:

                                            ------------------------

                                            ------------------------
                                            Attn:                  , Esq.
                                                  -----------------
                                            Telephone:
                                                      -----------------
                                            Facsimile:
                                                      -----------------
                                            Email:






                                       LANGER PARTNERS, LLC


                                       By: /s/ Warren B. Kanders
                                           ---------------------
                                       Name: Warren B. Kanders
                                       Title: Member

                                            Langer Partners, LLC
                                            c/o Kanders & Company, Inc.
                                            1 Landmark Square
                                            22nd Floor
                                            Stamford, CT 06901
                                            Phone: (203) 552-9600
                                            Fax:
                                                -----------------
                                            Email: wbkanders@bloomberg.net

                                            with a copy to:

                                            ------------------------

                                            ------------------------
                                            Attn:                  , Esq.
                                                  -----------------
                                            Telephone:
                                                      -----------------
                                            Facsimile:
                                                      -----------------
                                            Email:




                                   SCHEDULE 1
                                       TO
                       NOTE AND WARRANT PURCHASE AGREEMENT
                    SENIOR SUBORDINATED NOTES DUE 9/30/2007,
                        WARRANTS TO PURCHASE COMMON STOCK


    PURCHASERS, PRINCIPAL AMOUNTS OF NOTES AND NUMBER OF WARRANTS PURCHASED,
                               AND PURCHASE PRICE




- -----------------------------------------------------------------------------------------------------------------------
                                                                  Principal              Number of
Name of Purchaser                                               Amount of Note           Warrants        Purchase Price
- -----------------------------------------------------------------------------------------------------------------------

Wynnefield Partners Small Cap Value, LP I                          $700,000               14,000            $700,000
- -----------------------------------------------------------------------------------------------------------------------
Wynnefield Partners Small Cap Value, LP                            $850,000               17,000            $850,000
- -----------------------------------------------------------------------------------------------------------------------
Wynnefield Partners Small Cap Value Offshore Fund, Ltd.            $700,000               14,000            $700,000
- -----------------------------------------------------------------------------------------------------------------------
AmGUARD Insurance Company                                          $375,000                7,500            $375,000
- -----------------------------------------------------------------------------------------------------------------------
NorGUARD Insurance Company                                         $375,000                7,500            $375,000
- -----------------------------------------------------------------------------------------------------------------------
Globis Capital Partners, L.P.                                      $500,000               10,000            $500,000
- -----------------------------------------------------------------------------------------------------------------------
Globis Overseas Fund, Ltd                                          $250,000                5,000            $250,000
- -----------------------------------------------------------------------------------------------------------------------
Davos Partners, L.P.                                               $500,000               10,000            $500,000
- -----------------------------------------------------------------------------------------------------------------------
Charles V. Moore                                                   $500,000               10,000            $500,000
- -----------------------------------------------------------------------------------------------------------------------
Langer Partners, LLC                                               $750,000               15,000            $750,000
- -----------------------------------------------------------------------------------------------------------------------
       Totals                                                    $5,500,000              110,000          $5,500,000
- -----------------------------------------------------------------------------------------------------------------------






                                    EXHIBIT A

                        FORM OF SENIOR SUBORDINATED NOTE




                                    EXHIBIT B

                                 FORM OF WARRANT

EX-4.2

                                                                     Exhibit 4.2

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, ASSIGNED OR TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR UNLESS THE ISSUER HAS RECEIVED AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION UNDER
SAID ACT IS NOT REQUIRED

                                  LANGER, INC.

               7% Senior Subordinated Note due September 30, 2007



September 30, 2004                                                  $
                                                                     -----------

         LANGER, INC., a Delaware corporation (the "Company"), hereby promises
to pay to the order of ________________ (the "Purchaser"), or its assigns (the
Purchaser and each of its assigns is a "Holder"), the principal amount of
____________ ($_________), (the "Principal Amount").

         This Senior Subordinated Note ("Note") is one of a duly authorized
issue of Senior Subordinated Notes, aggregating $5,500,000 in principal amount,
issued pursuant to a certain Note and Warrant Purchase Agreement (hereinafter
called the "Purchase Agreement") dated as of September 30, 2004, between the
Company and the Purchasers named in said Purchase Agreement (capitalized terms
not otherwise defined herein shall have their respective meanings as set forth
in the Purchase Agreement).

         This Note is subject to the provisions of and is entitled to the
benefits of the Purchase Agreement. In addition, the payment of the principal
and interest on this Note is subordinated in right of payment to the prior
payment in full of certain other obligations of the Company to the extent and in
the manner set forth in the Purchase Agreement. Each holder of this Note, by
accepting the same, agrees to and shall be bound by the provisions of the
Purchase Agreement.

         No reference herein to the Purchase Agreement and no provision hereof
or thereof shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal hereof and interest hereon at
the respective times and places set forth herein and in the Purchase Agreement.

         1. Payment of Principal. The Company shall repay the entire Principal
Amount outstanding on or before the earliest of (a) September 30, 2007 (the
"Maturity Date"), (b) a sale or transfer (in one or more transactions or series
of transactions) of (i) all or substantially all of the assets of the Company or
its successors or assigns or (ii) a majority of the then-issued and outstanding
capital stock of the Company or its successors or assigns, or (c) a merger,
consolidation, share exchange or any other business combination involving the
Company or its successors or assigns whereby the holders of all of the issued
and outstanding capital stock of the Company prior to such transaction do not
hold at least a majority of the


                                       1


voting stock or other voting equity of the surviving or resulting entity in the
transaction immediately after consummation thereof.

         2. Payment of Interest. Interest shall accrue at the rate of seven
percent (7%) per annum (based on a 360 day year comprised of twelve 30 day
months) on the unpaid Principal Amount outstanding and be payable semi-annually
in arrears on the last day of June and December in each year until the Maturity
Date, at which time all unpaid principal and interest shall be due and payable
to the Holder in cash.

         3. Time of Payment. If any payment of principal or interest on this
Note shall become due on a Saturday, Sunday, or legal holiday under the laws of
the State of New York, such payment shall be made on the next succeeding day
that is not a Saturday, Sunday or such legal holiday (a "Business Day") and such
extension of time shall in such case be included in computing interest in
connection with such payment.

         4. Prepayment. The Company shall have the right to prepay this Note, in
whole or in part, at any time or from time to time, without premium or penalty
but with interest accrued and unpaid to the date of prepayment.

         5. Events of Default.

             (a) Definition. For purposes of this Note, an "Event of Default"
shall be deemed to have occurred if:

                  (i) the Company shall default in the payment of any amount due
under this Note on the date when due, whether at maturity or other time, by
acceleration or otherwise and such default shall continue for ten (10) days
after written notice thereof ;

                  (ii) any dissolution, winding up, liquidation, reorganization,
arrangement, adjustment, protection, relief or composition of the Company or its
debts, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership, arrangement, reorganization, relief or other proceedings or upon
an assignment for the benefit of creditors or any other marshalling of the
assets and liabilities of the Company, and in the case of an involuntary
proceeding, it is not dismissed within sixty (60) days (each, an "Insolvency
Event"); or

                  (iii) the Company fails to perform or observe any other
covenant or agreement of the Company contained in this Note or any material
covenant or material agreement contained in the Purchase Agreement or the
Related Documents which remain uncured for more than ten (10) days after written
notice thereof.

             (b) Consequences of Events of Default. Subject in all respects to
Article VI of the Purchase Agreement,

                  (i) If an Event of Default (other than an Insolvency Event)
has occurred and is continuing, the Holders of the Notes, by notice to the
Company from the Holders of more than 50% of the principal amount of the Notes
than outstanding, may declare all or any portion of the outstanding Principal
Amount due and payable and demand immediate payment of all or any portion of the
outstanding Principal Amount. If the Holder demands immediate

                                       2


payment of all or any portion of the Note, the Company shall immediately pay to
such Holder the Principal Amount requested to be paid together with all accrued
and unpaid interest thereon.

                  (ii) If an Insolvency Event has occurred, all of the
outstanding Principal Amount shall automatically be immediately due and payable
without any notice or other action on the part of the Holder.

                  (iii) If any Event of Default has occurred, interest shall
accrue on the Principal Amount of this Note in accordance with the terms of
Section 2 of this Note.

                  (iv) If any Event of Default has occurred, each Holder shall
also have any other rights or remedies which such Person may have pursuant to
applicable law or equity.

         6. Loss, Theft, Destruction or Mutilation of Note. Upon receipt of
evidence of the loss, theft, destruction or mutilation of this Note, and, in the
case of any such loss, theft or destruction, upon receipt of an affidavit of
loss from the Holder in form reasonably satisfactory to the Company, the Company
will make and deliver, in lieu of this Note, a new Note of like tenor.

         7. Place of Payment; Notices. Payments of principal and any notice
hereunder are to be delivered to the Holder at the following address:
______________, Attn: _____ or to such other address as specified in a written
notice delivered to the Company by Holder. Notices sent by the Company shall be
deemed received when delivered personally or one (1) Business Day after being
sent by Federal Express or other nationally recognized overnight carrier or
three (3) Business Days after being sent by certified or registered mail to the
following address:

          Langer, Inc.
          450 Commack Road
          Deer Park, New York 11729
          Attention: Chief Executive Officer
          Facsimile: (631) 667-1203

          with a copy to:

          Kane Kessler, P.C.
          1350 Avenue of the Americas
          New York, New York 10019
          Attention: Robert L. Lawrence, Esq.
          Facsimile: (212) 245 3009

         8. Jurisdiction. This Note shall be subject to the exclusive
jurisdiction of the courts of New York County, New York. The Company and the
Holder, for themselves and their successors, irrevocably and expressly agree to
submit to the exclusive jurisdiction of the courts of the State of New York for
the purpose of enforcing the terms of this Note or the transactions contemplated
hereby. The Company and the Holder irrevocably waive (for

                                       3


themselves and their successors), to the fullest extent permitted by law, any
objection which they may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Note or any
judgment entered by any court located in New York County, New York, and further
irrevocably waive any claim that any suit, action or proceeding brought in New
York County, New York has been brought in an inconvenient forum.

         9. Governing Law. The validity, construction, and interpretation of
this Note shall be governed by the internal laws of the State of New York
without respect to the principles of conflicts of laws of the State of New York
or any other jurisdiction.



      [SIGNATURE PAGE FOLLOWS; REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]





                                       4


         IN WITNESS WHEREOF, the Company has executed and delivered this Note on
the date first above written.


                                            LANGER, INC.



                                            By:
                                               ---------------------------------
                                               Name:
                                               Title:












                                       5

EX-4.3

                                                                     Exhibit 4.3

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, ASSIGNED OR TRANSFERRED, IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR UNLESS THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT REGISTRATION UNDER SAID ACT IS NOT REQUIRED.


No.
   ------------
                                                       Dated: September 30, 2004


                                  LANGER, INC.

                      WARRANT TO PURCHASE _______ SHARES OF
                     COMMON STOCK, PAR VALUE $0.02 PER SHARE

         For VALUE RECEIVED, ____________________ ("Holder"), is entitled to
purchase, subject to the provisions of this Warrant, from Langer, Inc., a
Delaware corporation ("Company"), from and after the earlier of (i) six months
after the refinancing or prepayment of the Company's series of 7% Senior
Subordinated Notes due September 30, 2007 or (ii) September 30, 2005 until 5:00
P.M., Eastern time, on September 30, 2009 (the "Warrant Expiration Date"), at an
exercise price per share equal to $0.02 (the exercise price in effect being
herein called the "Warrant Price"), ______ shares ("Warrant Shares") of the
Company's Common Stock, par value $0.02 per share ("Common Stock").
Notwithstanding anything to the contrary contained herein, in no event shall
this Warrant be exercisable, and the Company shall have no obligation to issue
the Warrant Shares, until such time as the Company's stockholders shall have
approved issuance of Common Stock in an amount exceeding twenty percent (20%) of
the Common Stock outstanding on the date of this Warrant (which amount shall
include the Warrant Shares) in satisfaction of Nasdaq Marketplace Rule
4350(i)(1)(D); provided, however, that the Company shall be permitted to waive
such requirement if it determines that such stockholder approval is not required
by Nasdaq Marketplace Rule 4350(i)(1)(D). The number of Warrant Shares
purchasable upon exercise of this Warrant and the Warrant Price shall be subject
to adjustment from time to time as described herein. From and after the
Expiration Date, this Warrant shall be of no further force and effect.
Capitalized terms used herein without definition shall have the respective
meanings given such terms in the Note and Warrant Purchase Agreement, dated
September 30, 2004, between the Company and the Purchasers named therein (the
"Purchase Agreement").

         Section 1. Registration. The Company shall maintain books for the
transfer and registration of the Warrant. Upon the initial issuance of this
Warrant, the Company shall issue and register the Warrant in the name of the
Holder. The Company may deem and treat the registered Holder of this Warrant as
the absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent actual notice to
the contrary.



         Section 2. Transfers. As provided herein, this Warrant may be
transferred only pursuant to a registration statement filed under the Securities
Act of 1933, as amended (the "Securities Act"), or an exemption from such
registration. Subject to such restrictions, the Company shall transfer this
Warrant from time to time upon the books to be maintained by the Company for
that purpose, upon surrender thereof for transfer properly endorsed or
accompanied by appropriate instructions for transfer and such other documents as
may be reasonably required by the Company, including, if required by the
Company, an opinion of its counsel to the effect that such transfer is exempt
from the registration requirements of the Securities Act, to establish that such
transfer is being made in accordance with the terms hereof, and a new Warrant
shall be issued to the transferee and the surrendered Warrant shall be canceled
by the Company.

         Section 3. Exercise of Warrant. Subject to the provisions hereof, the
Holder may exercise this Warrant in whole or in part at any time prior to its
expiration upon surrender of the Warrant, together with delivery of the duly
executed Warrant exercise form attached hereto as Appendix A (the "Exercise
Agreement") and payment by cash, certified check or wire transfer of funds for
the aggregate Warrant Price for that number of Warrant Shares then being
purchased, to the Company during normal business hours on any business day at
the Company's principal executive offices (or such other office or agency of the
Company as it may designate by notice to the Holder). The Warrant Shares so
purchased shall be deemed to be issued to the Holder or the Holder's designee,
as the record owner of such shares, as of the close of business on the date on
which this Warrant shall have been surrendered (or evidence of loss, theft or
destruction thereof and security or indemnity satisfactory to the Company), the
Warrant Price shall have been paid and the completed Exercise Agreement shall
have been delivered. Certificates for the Warrant Shares so purchased,
representing the aggregate number of shares specified in the Exercise Agreement,
shall be delivered to the Holder within a reasonable time, not exceeding three
(3) business days, after this Warrant shall have been so exercised. The
certificates so delivered shall be in such denominations as may be requested by
the Holder and shall be registered in the name of the Holder or, subject to the
transfer restrictions contained herein, such other name as shall be designated
by the Holder. If this Warrant shall have been exercised only in part, then,
unless this Warrant has expired, the Company shall, at its expense, at the time
of delivery of such certificates, deliver to the Holder a new Warrant
representing the number of shares with respect to which this Warrant shall not
then have been exercised. As used herein, "business day" means a day, other than
a Saturday or Sunday, on which banks in New York City are open for the general
transaction of business. Each exercise hereof shall constitute the
re-affirmation by the Holder that the representations and warranties contained
in Section 5 of the Purchase Agreement are true and correct in all material
respects with respect to the Holder as of the time of such exercise.

         Section 4. Compliance with the Securities Act of 1933. Except as
provided in the Purchase Agreement, the Company may cause the legend set forth
on the first page of this Warrant to be set forth on each Warrant or similar
legend on any security issued or issuable upon exercise of this Warrant, unless
counsel for the Company is of the opinion as to any such security that such
legend is unnecessary.

                                      -2-


         Section 5. Payment of Taxes. The Company will pay any documentary stamp
taxes attributable to the initial issuance of Warrant Shares issuable upon the
exercise of the Warrant; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Warrant Shares in a
name other than that of the Holder in respect of which such shares are issued,
and in such case, the Company shall not be required to issue or deliver any
certificate for Warrant Shares or any Warrant until the person requesting the
same has paid to the Company the amount of such tax or has established to the
Company's reasonable satisfaction that such tax has been paid. The Holder shall
be responsible for income taxes due under federal, state or other law, if any
such tax is due.

         Section 6. Mutilated or Missing Warrants. In case this Warrant shall be
mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and
substitution of and upon cancellation of the mutilated Warrant, or in lieu of
and substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor and for the purchase of a like number of Warrant Shares, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Company.

         Section 7. Reservation of Common Stock. The Company hereby represents
and warrants that there have been reserved, and the Company shall at all
applicable times keep reserved until issued (if necessary) as contemplated by
this Section 7, out of the authorized and unissued shares of Common Stock,
sufficient shares to provide for the exercise of the rights of purchase
represented by this Warrant. The Company agrees that all Warrant Shares issued
upon due exercise of the Warrant shall be, at the time of delivery of the
certificates for such Warrant Shares, duly authorized, validly issued, fully
paid and non-assessable shares of Common Stock of the Company.

         Section 8. Adjustments. Subject and pursuant to the provisions of this
Section 8, the Warrant Price and number of Warrant Shares subject to this
Warrant shall be subject to adjustment from time to time as set forth
hereinafter.

             (a) If the Company shall, at any time or from time to time while
this Warrant is outstanding, pay a dividend or make a distribution on its Common
Stock in shares of Common Stock, subdivide its outstanding shares of Common
Stock into a greater number of shares or combine its outstanding shares of
Common Stock into a smaller number of shares or issue by reclassification of its
outstanding shares of Common Stock any shares of its capital stock (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation), then the number of Warrant Shares
purchasable upon exercise of the Warrant and the Warrant Price in effect
immediately prior to the date upon which such change shall become effective,
shall be adjusted by the Company so that the Holder thereafter exercising the
Warrant shall be entitled to receive the number of shares of Common Stock or
other capital stock which the Holder would have received if the Warrant had been
exercised immediately prior to such event upon payment of a Warrant Price that
has been adjusted to reflect a fair allocation of the economics of such event to
the Holder. Such adjustments shall be made successively whenever any event
listed above shall occur.

                                      -3-


             (b) If any capital reorganization, reclassification of the capital
stock of the Company, consolidation or merger of the Company with another
corporation in which the Company is not the survivor, or sale, transfer or other
disposition of all or substantially all of the Company's assets to another
corporation shall be effected, then, as a condition of such reorganization,
reclassification, consolidation, merger, sale, transfer or other disposition,
lawful and adequate provision shall be made whereby each Holder shall thereafter
only have the right to purchase and receive upon the basis and upon the terms
and conditions herein specified and in lieu of the Warrant Shares immediately
theretofore issuable upon exercise of the Warrant, such shares of stock,
securities or assets as would have been issuable or payable with respect to or
in exchange for a number of Warrant Shares equal to the number of Warrant Shares
immediately theretofore issuable upon exercise of the Warrant, had such
reorganization, reclassification, consolidation, merger, sale, transfer or other
disposition not taken place, and in any such case appropriate provision shall be
made with respect to the rights and interests of each Holder to the end that the
provisions hereof (including, without limitation, provision for adjustment of
the Warrant Price) shall thereafter be applicable, as nearly equivalent as may
be practicable in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise hereof. The Company shall not effect
any such consolidation, merger, sale, transfer or other disposition unless prior
to or simultaneously with the consummation thereof the successor corporation (if
other than the Company) resulting from such consolidation or merger, or the
corporation purchasing or otherwise acquiring such assets or other appropriate
corporation or entity shall assume the obligation to deliver to the Holder, at
the last address of the Holder appearing on the books of the Company, such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, the Holder may be entitled to purchase, and the other obligations
under this Warrant. The provisions of this paragraph (b) shall similarly apply
to successive reorganizations, reclassifications, consolidations, mergers,
sales, transfers or other dispositions.

             (c) In case the Company shall fix a payment date for the making of
a distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness or assets (other than cash
dividends or cash distributions payable out of consolidated earnings or earned
surplus or dividends or distributions referred to in Section 8(a)), or
subscription rights or warrants, the Warrant Price to be in effect after such
payment date shall be determined by multiplying the Warrant Price in effect
immediately prior to such payment date by a fraction, the numerator of which
shall be the total number of shares of Common Stock outstanding multiplied by
the Market Price (as defined below) per share of Common Stock immediately prior
to such payment date, less the fair market value (as determined by the Company's
Board of Directors in good faith) of said assets or evidences of indebtedness so
distributed, or of such subscription rights or warrants, and the denominator of
which shall be the total number of shares of Common Stock outstanding multiplied
by such Market Price per share of Common Stock immediately prior to such payment
date. "Market Price" as of a particular date (the "Valuation Date") shall mean
the following: (a) if the Common Stock is then listed on a national stock
exchange, the closing sale price of one share of Common Stock on such exchange
on the last trading day prior to the Valuation Date; (b) if the Common Stock is
then quoted on The Nasdaq Stock Market, Inc. ("Nasdaq"), the National
Association of Securities Dealers, Inc. OTC Bulletin Board (the "Bulletin
Board"), the National Quotation Board "Pink Sheets" (the

                                      -4-


"NQB") or such similar exchange or association, the closing sale price of one
share of Common Stock on Nasdaq, the Bulletin Board or such other exchange or
association on the last trading day prior to the Valuation Date or, if no such
closing sale price is available, the average of the high bid and the low asked
price quoted thereon on the last trading day prior to the Valuation Date; or (c)
if the Common Stock is not then listed on a national stock exchange or quoted on
Nasdaq, the Bulletin Board or such other exchange or association, the fair
market value of one share of Common Stock as of the Valuation Date, shall be
determined in good faith by the Board of Directors of the Company and the
Holder. If the Common Stock is not then listed on a national securities
exchange, the Bulletin Board, the NQB or such other exchange or association, the
Board of Directors of the Company shall respond promptly, in writing, to an
inquiry by the Holder prior to the exercise hereunder as to the fair market
value of a share of Common Stock as determined by the Board of Directors of the
Company. In the event that the Board of Directors of the Company and the Holder
are unable to agree upon the fair market value in respect of subpart (c) hereof,
the Company and the Holder shall jointly select an appraiser, who is experienced
in such matters. The decision of such appraiser shall be final and conclusive,
and the cost of such appraiser shall be borne equally by the Company and the
Holder. Such adjustment shall be made successively whenever such a payment date
is fixed.

             (d) An adjustment to the Warrant Price shall become effective
immediately after the payment date in the case of each dividend or distribution
and immediately after the effective date of each other event which requires an
adjustment.

             (e) In the event that, as a result of an adjustment made pursuant
to this Section 8, the Holder shall become entitled to receive any shares of
capital stock of the Company other than shares of Common Stock, the number of
such other shares so receivable upon exercise of this Warrant shall be subject
thereafter to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Warrant Shares
contained in this Warrant.

             (f) Anything herein to the contrary notwithstanding, the Company
shall not be required to make any adjustment of the Warrant Price in the case of
the issuance of (A) capital stock, options or convertible securities issued to
directors, officers, employees or consultants of the Company in connection with
their service as directors of the Company, their employment by the Company or
their retention as consultants by the Company pursuant to an equity compensation
program approved by the Board of Directors of the Company or the compensation
committee of the Board of Directors of the Company, (B) shares of Common Stock
issued upon the conversion or exercise of options or convertible securities
granted or issued prior to the date hereof, (C) securities issued pursuant to
the Purchase Agreement and securities issued upon the exercise of those
securities, and (D) shares of Common Stock issued or issuable by reason of a
dividend, stock split or other distribution on shares of Common Stock (but only
to the extent that such a dividend, split or distribution results in an
adjustment in the Warrant Price pursuant to the other provisions of this
Warrant) (collectively, "Excluded Issuances").

             (g) Notwithstanding any provision of this Section 8, no adjustment
of the Warrant Price shall be required if such adjustment is less than $0.01;
provided, however, that any

                                      -5-


adjustments which by reason of this Section 8(g) are not required to be made
shall be carried forward and taken into account for purposes of any subsequent
adjustment.

         Section 9. Fractional Interest. The Company shall not be required to
issue fractions of Warrant Shares upon the exercise of this Warrant. If any
fractional share of Common Stock would, except for the provisions of the first
sentence of this Section 9, be deliverable upon such exercise, the Company, in
lieu of delivering such fractional share, shall pay to the exercising Holder an
amount in cash equal to the Market Price of such fractional share of Common
Stock on the date of exercise.

         Section 10. Benefits. Nothing in this Warrant shall be construed to
give any person, firm or corporation (other than the Company and the Holder) any
legal or equitable right, remedy or claim, it being agreed that this Warrant
shall be for the sole and exclusive benefit of the Company and the Holder.

         Section 11. Notices to Holder. Upon the happening of any event
requiring an adjustment of the Warrant Price, the Company shall promptly give
written notice thereof to the Holder at the address appearing in the records of
the Company, stating the adjusted Warrant Price and the adjusted number of
Warrant Shares resulting from such event and setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is based.
Failure to give such notice to the Holder or any defect therein shall not affect
the legality or validity of the subject adjustment.

         Section 12. Identity of Transfer Agent. The Transfer Agent for the
Common Stock is Registrar and Transfer Company. Upon the appointment of any
subsequent transfer agent for the Common Stock or other shares of the Company's
capital stock issuable upon the exercise of the rights of purchase represented
by the Warrant, the Company will mail to the Holder a statement setting forth
the name and address of such transfer agent.

         Section 13. Notices. Unless otherwise provided, any notice required or
permitted under this Warrant shall be given in writing and shall be deemed
effectively given as hereinafter described (i) if given by personal delivery,
then such notice shall be deemed given upon such delivery, (ii) if given by
telex or facsimile or electronic mail, then such notice shall be deemed given
upon receipt of confirmation of complete transmittal, (iii) if given by mail,
then such notice shall be deemed given upon the earlier of (A) receipt of such
notice by the recipient or (B) three days after such notice is deposited in
first class mail, postage prepaid, and (iv) if given by an internationally
recognized overnight air courier, then such notice shall be deemed given one
business day after delivery to such carrier. All notices shall be addressed as
follows: if to the Holder, at its address as set forth in the Company's books
and records and, if to the Company, at the address as follows, or at such other
address as the Holder or the Company may designate by ten days' advance written
notice to the other:


                                      -6-


                           If to the Company:

                           Langer, Inc.
                           450 Commack Road
                           Deer Park, NY 11729
                           Facsimile: (631) 667-1203
                           Attention: Chief Executive Officer

                           with a copy to:
                           Kane Kessler, P.C.
                           1350 Avenue of the Americas
                           New York, NY 10019
                           Fax: (212) 245-3009
                           Attention: Robert L. Lawrence, Esq.


         Section 14. Registration Rights. The initial Holder is entitled to the
benefit of certain registration rights with respect to the shares of Common
Stock issuable upon the exercise of this Warrant as provided in the Registration
Rights Agreement, and any subsequent Holder may be entitled to such rights.

         Section 15. Successors. All the covenants and provisions hereof by or
for the benefit of the Holder shall bind and inure to the benefit of its
respective successors and assigns hereunder.

         Section 16. Governing Law; Consent to Jurisdiction; Waiver of Jury
Trial. This Warrant shall be governed by, and construed in accordance with, the
internal laws of the State of New York, without reference to the choice of law
provisions thereof. The Company and, by accepting this Warrant, the Holder, each
irrevocably submits to the exclusive jurisdiction of the courts of the State of
New York located in New York County and the United States District Court for the
Southern District of New York for the purpose of any suit, action, proceeding or
judgment relating to or arising out of this Warrant and the transactions
contemplated hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the world by the
same methods as are specified for the giving of notices under this Warrant. The
Company and, by accepting this Warrant, the Holder, each irrevocably consents to
the jurisdiction of any such court in any such suit, action or proceeding and to
the laying of venue in such court. The Company and, by accepting this Warrant,
the Holder, each irrevocably waives any objection to the laying of venue of any
such suit, action or proceeding brought in such courts and irrevocably waives
any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum. EACH OF THE COMPANY AND, BY ITS
ACCEPTANCE HEREOF, THE HOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY
IN ANY LITIGATION

                                      -7-


WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED
SPECIFICALLY AS TO THIS WAIVER.

         Section 17. No Rights as Stockholder. Prior to the exercise of this
Warrant, the Holder shall not have or exercise any rights as a stockholder of
the Company by virtue of its ownership of this Warrant.

         Section 18. Amendment; Waiver. This Warrant is one of a series of
Warrants of like tenor issued by the Company pursuant to the Purchase Agreement
and initially covering an aggregate of 110,000 shares of Common Stock
(collectively, the "Company Warrants"). Any term of this Warrant may be amended
or waived (including the adjustment provisions included in Section 8 of this
Warrant) upon the written consent of the Company and the holders of Company
Warrants representing at least 50% of the number of shares of Common Stock then
subject to all outstanding Company Warrants (the "Majority Holders"); provided,
that (x) any such amendment or waiver must apply to all Company Warrants; and
(y) the number of Warrant Shares subject to this Warrant, the Warrant Price and
the Warrant Expiration Date may not be amended, and the right to exercise this
Warrant may not be altered or waived, without the written consent of the Holder.

         Section 19. Section Headings. The section headings in this Warrant are
for the convenience of the Company and the Holder and in no way alter, modify,
amend, limit or restrict the provisions hereof.

         Section 20. Warrant Agent. The Company shall serve as warrant agent
under this Warrant. Upon not less than 30 days' notice to the Holder, the
Company may appoint a new warrant agent, which shall be reasonably satisfactory
to the Majority Holders. Any Person into which any new warrant agent may be
merged, any Person resulting from any consolidation to which any new warrant
agent shall be a party or any Person to which any new warrant agent transfers
substantially all of its corporate trust or shareholders services business shall
be a successor warrant agent under this Warrant without any further act. Any
such successor warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed (by first class mail, postage prepaid) to the Holder
at the Holder's last address as shown on the Warrant register.

         Section 21. Severability. Any provision of this Warrant that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the Company, and by its
acceptance hereof, the Holder, hereby waive any provision of law which renders
any provision hereof prohibited or unenforceable in any respect.

                  [Remainder of page intentionally left blank]


                                      -8-


         IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed, as of the 30th day of September, 2004.



                                        LANGER, INC.



                                        By:
                                           ------------------------------
                                           Name:
                                           Title:




                                      -9-


                                   APPENDIX A
                                  LANGER, INC.
                              WARRANT EXERCISE FORM

To Langer, Inc.:

         The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant ("Warrant") for, and to purchase
thereunder by the payment of the Warrant Price and surrender of the Warrant,
_______________ shares of Common Stock ("Warrant Shares") provided for therein,
and requests that certificates for the Warrant Shares be issued as follows:


               --------------------------------
               Name
               --------------------------------
               Address
               --------------------------------

               --------------------------------
               Federal Tax ID or Social Security No.


         and delivered by (certified mail to the above address, or
(electronically (provide DWAC Instructions:___________________), or (other
(specify): __________________________________________).

and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the balance of
the Warrant Shares purchasable upon exercise of this Warrant be registered in
the name of the undersigned Holder or the undersigned's Assignee as below
indicated and delivered to the address stated below.


Dated:              ,
       ------------- ------

Note:  The signature must correspond with
       Signature:______________________________
the name of the Holder as written
on the first page of the Warrant in every            ---------------------------
particular, without alteration or enlargement        Name (please print)
or any change whatever, unless the Warrant
has been assigned.                                   ---------------------------

                                                     ---------------------------
                                                     Address


                                                     ---------------------------
                                                     Federal Identification or
                                                     Social Security No.




                                                     Assignee:

                                                     ---------------------------

                                                     ---------------------------

                                                     ---------------------------






                                       11

EX-4.4

                        STOCK PLEDGE AND AGENCY AGREEMENT


         THIS STOCK PLEDGE AND AGENCY AGREEMENT (this "Agreement"), is made
effective the 30th day of September, 2004, by and among Langer, Inc., a Delaware
corporation ("Pledgor"), SSL Holdings, Inc., a Delaware corporation (the
"Payee") and Pepper Hamilton LLP (the "Agent").

                                   BACKGROUND

         WHEREAS, Pledgor and the Payee are parties to that certain Stock
Purchase Agreement dated September 22, 2004 (the "Purchase Agreement"), whereby
Pledgor has agreed to purchase all of the issued and outstanding shares of
Silipos, Inc., a Delaware corporation (the "Company"), consisting of three
hundred (300) shares of Class A Common Stock and fifteen (15) shares of Class B
Common Stock (collectively, the "Shares") of the common stock of the Company,
from the Payee and the Payee desires to sell the Shares to Pledgor;

         WHEREAS, concurrently with the execution of this Agreement, Pledgor is
purchasing the Shares from the Payee pursuant to the terms and conditions set
forth in the Purchase Agreement;

         WHEREAS, in consideration for the sale of the Shares by the Payee to
Pledgor, Pledgor has issued agreed to (i) pay to the Payee Five Million Dollars
($5,000,000) in cash, (ii) issue a Promissory Note in favor of the Payee in the
original principal amount of Seven Million Five Hundred Thousand Dollars
($7,500,000), a copy of which is attached hereto as Exhibit A (the "Note"),
(iii) issue a Promissory Note in favor of the Payee in the original principal
amount of Three Million Dollars ($3,000,000) (the "Additional Note"), and (iii)
execute and deliver this Agreement to the Payee;

         WHEREAS, as security for the prompt satisfaction of the Secured
Obligations (as defined in Section 2.2 below) under the Note, Pledgor has agreed
to pledge the Shares and execute and deliver this Agreement to the Payee; and

         WHEREAS, it is a condition to the effectiveness of the transactions
contemplated in the Purchase Agreement, including, without limitation, the sale
and transfer of the Shares by the Payee to Pledgor, that Pledgor execute and
deliver this Agreement.

                                      TERMS

         NOW, THEREFORE, for and in consideration of the foregoing premises and
for the other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby covenant and agree as follows:



                                   ARTICLE 1
                                  DEFINITIONS

         Section 1.1 Definitions. Unless otherwise defined herein, capitalized
terms used herein shall have the respective meanings assigned to such terms in
the Note.

         Section 1.2 UCC Terms. All terms defined in the Applicable UCC and used
herein shall have the same definitions herein as specified in the Applicable
UCC, provided, if a term is defined in Article 9 of the Applicable UCC
differently than in another Article of the Applicable UCC, the term has the
meaning specified in Article 9 of the Applicable UCC. "Applicable UCC" shall
mean the Uniform Commercial Code as in effect in the State of New York on the
date of this Agreement and as amended from time to time hereafter, and any new
version thereof or new legislation adopted to replace the provisions thereof;
provided, however, in the event that, by reason of mandatory provisions of law,
any or all of the attachment, perfection or priority of the Secured Party's
security interest in any Collateral is governed by the Uniform Commercial Code
as enacted and in effect in a jurisdiction other than the State of New York, the
term "Applicable UCC" shall mean the Uniform Commercial Code as enacted and in
effect in such other jurisdiction solely for purposes of the provisions hereof
relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.

                                    ARTICLE 2
                             THE SECURITY INTERESTS

         Section 2.1 The Security Interests. As security for the payment and
performance in full of all of the Secured Obligations (as hereinafter defined in
Section 2.2), Pledgor hereby pledges to the Payee, and grants to the Payee, a
security interest in all of the following, in each case whether now or hereafter
existing or in which such Pledgor now has or hereafter acquires an interest and
wheresoever located (collectively, the "Collateral"):

                  (i) The Shares and all additional shares of capital stock of
the Company now or hereafter owned or held by Pledgor (collectively, the
"Pledged Shares"), including, without limitation, those shares described on
Exhibit B attached hereto; and

                  (ii) The certificates representing the Pledged Shares, and any
interest of Pledgor in the entries on the books of any financial intermediary
relating to the Pledged Shares, and all dividends or distributions of property
(specifically excluding cash), warrants, rights, instruments and other property
(specifically excluding cash) from time to time received, receivable or
otherwise made upon or distributed in respect of (specifically excluding cash)
or in exchange for or upon conversion of any or all of the Pledged Shares; and

                  (iii) To the extent not otherwise included in the foregoing,
all cash and non-cash proceeds of the foregoing.

         Section 2.2 Security for the Secured Obligations. This Agreement
secures, and the Collateral is collateral security for, the prompt payment and
performance in full when due (whether at stated maturity, by required
prepayment, acceleration, demand or otherwise) of all of the indebtedness,
obligations and liabilities of Pledgor to the Payee, now existing or hereafter
incurred, absolute or contingent, direct or indirect, secured or unsecured, due
or to become due

                                      -2-


under the Note and, in the event of the occurrence of an Event of Default under
the Note (collectively, the "Secured Obligations"). Pledgor hereby covenants
that, until all of the obligations under the Note have been satisfied in full,
it will not agree or purport to sell, convey, or otherwise dispose of any of the
Pledged Shares or any interest therein, or create, incur, or permit to exist any
claim, pledge, mortgage, lien, charge, encumbrance or any security interest
whatsoever in or with respect to any of the Collateral or the proceeds thereof,
other than that created hereby and, , will not do or suffer any act or failure
to act which would impair the lien on or the value of the Collateral, except as
otherwise permitted herein and under the Note.

         Section 2.3 Delivery of Certificated Collateral. All certificates or
instruments representing or evidencing the Collateral shall be delivered to and
held by or on behalf of the Payee pursuant hereto and shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed stock powers
or other instruments of transfer or assignment in blank. The Payee shall have
the right, upon the occurrence of an "Event of Default" as defined under the
Note (any such Event of Default being, for purposes of this Agreement, a
"Default"), to cause any or all of the Collateral to be validly and irrevocably
transferred of record into the name of the Payee or its nominee.

         Section 2.4 Termination of Security Interests; Release of Collateral.
This Agreement shall continue in force and effect until the indefeasible payment
of the Secured Obligations. If the Payee receives any payment or payments on
account of the Secured Obligations which payment or payments or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside and/or required to be repaid to a trustee, receiver, or any other party
under the Bankruptcy Code, 11 U.S.C. ss.101 et seq., as amended, or any other
state or federal law, common law or equitable doctrine, then to the extent of
any sum not finally retained by the Payee, Pledgor's obligations to the Payee
shall be reinstated and this Agreement, and any security therefor, shall remain
in full force and effect (or be reinstated) until payment shall have been made
to the Payee, notwithstanding termination of this Agreement or the cancellation
of the Note or any other note, instrument or agreement evidencing the Secured
Obligations, and such payment shall be due on demand by the Payee. Upon the
full, final and irrevocable payment and performance of all the Secured
Obligations, the security interests in the Collateral shall terminate and all
rights to the Collateral shall irrevocably revert to Pledgor. Payee agrees that
upon such termination it shall execute and deliver to the Pledgor such documents
as the Pledgor shall reasonably request to evidence such termination.

                                   ARTICLE 3
                CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS

         Pledgor represents and warrants as follows:

                  (i) This Agreement constitutes a valid and binding agreement
of Pledgor, enforceable against Pledgor in accordance with its terms;

                  (ii) Except to the extent caused solely by a breach of the
Payee of its representations and warranties in Sections 3.2, 3.3 and 3.28 of the
Purchase Agreement, Pledgor legally and beneficially owns all of the Pledged
Shares free and clear of any Liens other than the security interest granted
hereby;

                                      -3-


                  (iii) Pledgor is not and will not become a party to, otherwise
be bound by, any agreement, other than this Agreement, which restricts in any
manner the rights of any present or future holder of any of the Collateral with
respect thereto except with respect to the extent the Note and the rights to the
Collateral are subordinate to the Senior Debt (as such term is defined in the
Note);

                  (iv) Except to the extent caused solely by a breach of the
Payee of its representations and warranties in Sections 3.2, 3.4, 3.5 and 3.28
of the Purchase Agreement, the execution and delivery of this Agreement, and the
performance of its terms, will not violate or constitute a default under the
terms of any agreement, indenture or other instrument, license, judgment,
decree, order, law, statute, ordinance or other governmental rule or regulation,
applicable to Pledgor or any of his property;

                  (v) Upon delivery of the Collateral to Payee or its agent,
this Agreement shall create a valid first lien (except to the extent that the
Payee breaches its representations and warranties set forth in Section 3.28 of
the Purchase Agreement) upon and perfected security interest in the Collateral
and the proceeds thereof, subject to no prior security interest, lien, charge,
hypothecation, or encumbrance of any kind, or agreement purporting to grant to
any third party a security interest or lien in or against the property or assets
of Pledgor which would include the Collateral;

                  (vi) Pledgor warrants and will, at its own expense, preserve,
defend and protect the Collateral and Payee's right, title, special property and
security interest in and to the Collateral against the claims of any person,
firm, corporation or other entity whatsoever; provided, that in the event that
the Payee has breached its representations and warranties set forth in Section
3.28 of the Purchase Agreement and the basis of such breach is the basis of the
claim of any person, firm, corporation or other entity with respect to the
Collateral, the Pledgor shall only be required to use its commercially
reasonable efforts to preserve, defend and protect the Collateral and Payee's
right, title, special property and security interest in and to the Collateral
against such claim(s);

                  (vii) Pledgor will promptly deliver to Payee all written
notices, and will promptly give Payee written notice of any other notices,
received by him with respect to any event or condition which may impair the
condition of the Collateral.

                                   ARTICLE 4
                       DISTRIBUTIONS ON COLLATERAL; VOTING

         Section 4.1 No Default. So long as no Default shall have occurred and
be continuing:

                  (i) Pledgor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Collateral or any part thereof for
any purpose not inconsistent with the terms of this Agreement;

                  (ii) Pledgor shall be entitled to receive and retain any and
all dividends, interest and other payments and distributions made upon or with
respect to the Collateral, provided, however, that any and all:

                                      -4-


                           (A) dividends and interest paid or payable other than
in cash in respect of any Collateral, and instruments and other property
received, receivable or otherwise distributed in respect of, or in exchange for,
any Collateral; and

                           (B) cash paid, payable or otherwise distributed in
respect of principal of, in redemption of, or in exchange for, any Collateral,
except with respect to dividends or distributions of cash,

                  shall be, and shall be forthwith delivered to the Agent, on
behalf of the Payee to hold as, Collateral and shall, if received by Pledgor, be
received in trust for the benefit of the Payee, be segregated from the other
property or funds of Pledgor and be forthwith delivered to the Payee as
Collateral in the same form as so received (with any necessary endorsement).

         Section 4.2 After Occurrence of a Default. Upon the occurrence and
during the continuance of a Default:

                  (i) All rights of Pledgor to receive the payments which it
would otherwise be authorized to receive and retain pursuant to Section 4.1(ii)
shall cease, and all such rights shall thereupon become vested in the Payee
which shall thereupon have the sole right to receive and hold as Collateral such
dividends and interest payments;

                  (ii) All payments which are received by Pledgor contrary to
the provisions of paragraph (i) of this Section 4.2 shall be received in trust
for the benefit of the Payee, shall be segregated from other funds of Pledgor
and shall be forthwith paid over to the Payee as Collateral in the same form as
so received (with any necessary endorsement); and

                  (iii) All rights of Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant to
Section 4.1(i) shall cease, and all such rights shall thereupon become vested in
the Payee, who shall thereupon have the sole right to exercise such voting and
other consensual rights.

         Section 4.3 Subordination.

             (a) Notwithstanding anything else in this Agreement to the
contrary, (i) the Payee hereby subordinates to any holder ("Senior Creditor") of
Senior Indebtedness (as defined in the Note), solely with respect to such Senior
Indebtedness, any and all of its liens, claims, demands, rights or interests
that Payee now has or hereafter acquires in, on or to the Collateral and all
additions thereto and replacements and substitutions therefor, including without
limitation any right to levy, distrain, take possession of, sell or otherwise
take any action with respect to, the Collateral pursuant to this Agreement, and
(ii) the Senior Creditor's security interest, solely with respect to the Senior
Indebtedness, if any, in and to the Collateral shall be senior to all other
liens, claims and interests of the Payee in the Collateral. In the event the
Collateral is pledged to secure any Senior Indebtedness, (i) the Payee will
cause the Agent to promptly deliver the Collateral to any such Senior Creditor
in accordance with the reasonable provisions of the Senior Indebtedness and (ii)
f the Payee shall receive any payment or distribution of any Collateral while
any Senior Indebtedness is outstanding, it shall hold such payment or
distribution in trust

                                      -5-


for the benefit of the Senior Creditor and shall immediately pay or transfer the
same over to the Senior Creditor for application in payment of the Senior
Indebtedness.

             (b) The Payee acknowledges and agrees that, regardless of the time
of loans, advances or extensions of credit made by the Senior Creditor to the
Pledgor or the relative times or order of attachment, perfection or creation of
any liens, claims, demands, rights or interests on Pledgor's assets or
properties securing the Senior Indebtedness or the Note, or the actual
possession of the Collateral, or the order of filing or recording of financing
statements, mortgages or other documents, if any, or any defect, deficiency,
error or omission contained in any of the financing agreements thereof, or
anything in this Agreement to the contrary, as between the Payee and the Senior
Creditor, any liens, claims, demands, rights or interests that may be granted
from time to time pursuant to this Agreement or otherwise, solely to the extent
that the Collateral is pledged to secure any Senior Indebtedness, shall in all
respects be subordinate and junior in priority and right of enforcement to the
liens, claims, demands, rights or interests granted to the Senior Creditor in
the Collateral. The Payee shall not directly or indirectly contest or take any
action that questions the validity, priority, perfection or enforceability of
the liens, claims, demands, rights or interests granted to the Senior Creditor
in the Collateral.

                                   ARTICLE 5
                           GENERAL AUTHORITY; REMEDIES

         Section 5.1 General Authority. Pledgor hereby irrevocably appoints the
Agent on behalf of the Payee, with full power of substitution, as its true and
lawful attorney-in-fact, in the name of Pledgor or its own name, for the sole
use and benefit of the Payee, but at Pledgor's expense, at any time and from
time to time only after the occurrence and during the continuance of a Default,
subject to the terms of Article 6 of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to carry out the terms of this Agreement and,
without limiting the foregoing, Pledgor hereby gives the Payee the power and
right on its behalf, without notice to or further assent by Pledgor to do the
following:

                  (i) to receive, take, endorse, assign and deliver any and all
checks, notes, drafts, acceptances, documents and other negotiable and
non-negotiable instruments taken or received by Pledgor as, or in connection
with, the Collateral;

                  (ii) to demand, sue for, collect, receive and give acquittance
for any and all monies due or to become due upon or in connection with the
Collateral;

                  (iii) to commence, settle, compromise, compound, prosecute,
defend or adjust any claim, suit, action or proceeding with respect to, or in
connection with, the Collateral;

                  (iv) to sell, transfer, assign or otherwise deal in or with
the Collateral or any part thereof, as fully and effectually as if the Payee
were the absolute owner thereof; and

                  (v) to do, at its option, but at the reasonable expense of
Pledgor, at any time or from time to time, all acts and things which the Payee
deems necessary to protect or preserve the Collateral and to realize upon the
Collateral.

                                      -6-


         Section 5.2 UCC Rights. If a Default shall have occurred, the Payee may
in addition to all other rights and remedies granted to it in this Agreement and
in any other agreement securing, evidencing or relating to the Secured
Obligations, exercise (i) all rights and remedies of a secured party under the
UCC (whether or not in effect in the jurisdiction where such rights are
exercised) and (ii) all other rights available to the Payee at law or equity.

         Section 5.3 Application of Cash; Sale of Collateral. Subject to the
terms of Article 6 of this Agreement, Pledgor expressly agrees that if a Default
shall occur and be continuing, the Payee may forthwith (i) apply the cash, if
any, then held by it as Collateral as specified in Section 5.8 and (ii) if there
shall be no such cash or if such cash shall be insufficient to pay the Secured
Obligations in full, to collect, receive, appropriate and realize upon the
Collateral, and/or sell, assign, give an option or options to purchase or
otherwise dispose of and deliver the Collateral (or contract to do so) at public
or private sale, as the Payee may deem best, for cash or on credit or for future
delivery without assumption of any credit risk.

         Section 5.4 Rights of Purchasers. Upon any sale of the Collateral
(whether public or private), the Payee shall have the right to deliver, assign
and transfer to the purchaser thereof the Collateral so sold. Each purchaser
(including the Payee) at any such sale shall hold the Collateral so sold
absolutely free from any claim or right of whatever kind, including any equity
or right of redemption of Pledgor or the Company.

         Section 5.5 Securities Act, Etc.

             (a) In view of the position of Pledgor in relation to the
Collateral, or because of other present or future circumstances, a question may
arise under the Securities Act of 1933 or the Securities Exchange Act of 1934,
as either is now or hereafter in effect, or any similar statute hereafter
enacted analogous in purpose or effect (such acts and any such similar statute
as from time to time in effect being herein called the "Federal Securities
Laws") with respect to any disposition of the Collateral permitted hereunder.
Pledgor understands that compliance with the Federal Securities Laws might very
strictly limit the course of conduct of the Payee if the Payee were to attempt
to dispose of all or any part of the Collateral, and might also limit the extent
to which or the manner in which any subsequent transferee of any Collateral
could dispose of the same. Similarly, there may be other legal restrictions or
limitations affecting the Payee in any attempt to dispose of all or part of the
Collateral under applicable Blue Sky or other state securities laws or similar
laws analogous in purpose or effect. Under applicable law, in the absence of an
agreement to the contrary, the Payee may be held to have certain general duties
and obligations to Pledgor to make some effort toward obtaining a fair price
even though the obligations of Pledgor may be discharged or reduced by the
proceeds of a sale at a lesser price. Pledgor clearly understands that the Payee
is not to have any such general duty or obligation to Pledgor, and Pledgor will
not attempt to hold the Payee responsible for selling all or any part of the
Collateral at any inadequate price even if the Payee shall accept the first
offer received or does not approach more than one possible purchaser. Without
limiting the generality of the foregoing, the provisions of this Section would
apply if, for example, the Payee were to place all or any part of the Collateral
for private placement by an investment banking firm, or if such investment
banking firm purchased all of any part of the Collateral for its own account, or
if the Payee placed all or any part of the Collateral privately with a purchaser
or purchaser.

                                      -7-


             (b) Accordingly, Pledgor expressly agrees that the Payee is
authorized, in connection with any sale of the Collateral, in its reasonable
discretion, to do, (i) to restrict the prospective bidders on or purchasers of
any of the Collateral to a limited number of sophisticated investors who will
represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or sale of any of such
Collateral, (ii) to cause to be placed on certificates for any or all of the
Collateral or on any other securities pledged hereunder a legend to the effect
that such security has not been registered under the Federal Securities Laws and
may not be disposed of in violation of the provision of said Federal Securities
Laws and (iii) to impose such other limitations or conditions in connection with
any such sale as the Payee deems reasonably necessary or advisable in order to
comply with said Federal Securities Laws or any other law. Pledgor covenants and
agrees that it will execute and deliver such documents and take such other
action as the Payee deems necessary or advisable in order to comply with said
Federal Securities Laws or any other law. The Payee shall be under no obligation
to delay a sale of any Collateral for a period of time necessary to permit the
issuer of any securities contained therein to register such securities under the
Federal Securities Laws, or under applicable state securities laws, even if the
issuer would agree to it. Nothing contained herein shall require the Pledgor to
register such securities under the Federal Securities Laws, or under applicable
state securities laws.

         Section 5.6 Other Rights of the Payee.

             (a) The Payee: (i) shall have the right and power to institute and
maintain such suits and proceedings as it may deem appropriate to protect and
enforce the rights vested in it by this Agreement and (ii) may proceed by suit
or suits at law or in equity to enforce such rights and to foreclose upon the
Collateral and to sell all, or from time to time, any of the Collateral under
the judgment or decree of a court of competent jurisdiction.

             (b) Upon a Default, the Payee shall, to the extent permitted by
applicable law, without regard to the solvency or insolvency at such time of any
Person then liable for the payment of any of the Secured Obligations, without
regard to the then value of the Collateral and without requiring any bond from
any complainant in such proceedings, be entitled as a matter of right to the
appointment of a receiver or receivers (who may be the Payee) of the Collateral
or any part thereof, and of the profits, revenues and other income thereof,
pending such proceedings, with such powers as the court making such appointment
shall confer, and to the entry of an order directing that the profits, revenues
and other income of the property constituting the whole or any part of the
Collateral be segregated, sequestered and impounded for the benefit of the
Payee.

             (c) In no event shall the Payee have any duty to exercise any
rights or take any steps to preserve the rights of the Payee in the Collateral,
nor shall the Payee be liable to Pledgor or any other Person for any loss caused
by Payee's failure to meet any obligation imposed by Section 9-207 of the UCC or
any successor provision. Without limiting the foregoing, the Payee shall be
deemed to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Payee accords its own property, it being
understood that the Payee shall not have any duty or responsibility for (i)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
the

                                      -8-


Payee has or is deemed to have knowledge of such matters or (ii) taking any
necessary steps to preserve rights against any parties with respect to any
Collateral.

         Section 5.7 Waiver and Estoppel.

             (a) Pledgor, to the extent it may lawfully do so, on behalf of
itself and all who claim through or under it, including without limitation any
and all subsequent creditors, vendees, assignees and lienors, waives and
releases all rights to demand or to have any marshaling of the Collateral upon
any sale, whether made under any power of sale granted herein or pursuant to
judicial proceedings or under any foreclosure or any enforcement of this
Agreement, and consents and agrees that all of the Collateral may at any such
sale be offered and sold as an entirety.

             (b) Pledgor waives, to the extent permitted by law, presentment,
demand, protest and any notice of any kind (except the notices expressly
required hereunder) in connection with this Agreement and any action taken by
the Payee with respect to the Collateral.

         Section 5.8 Application of Moneys. The proceeds of any sale of, or
other realization upon all or any part of the Collateral shall be applied by the
Payee in the following order of priority:

                  (i) first, to payment of the expenses of such sale or other
realization, including reasonable compensation to the Payee and its agents and
counsel, and all reasonable expenses, liabilities and advances incurred or made
by the Payee, its agents and counsel in connection therewith or in connection
with the care, safekeeping or otherwise of any or all of the Collateral, and any
other unreimbursed expenses for which the Payee is to be reimbursed pursuant to
Section 7.3;

                  (ii) second, to payment of the Secured Obligations; and

                  (iii) finally, any surplus then remaining shall be paid to
Pledgor, or its successors or assigns, or to whomsoever may be lawfully entitled
to receive the same or as a court of competent jurisdiction may direct.

                                   ARTICLE 6
                                  PLEDGE AGENT

         Section 6.1 Deposit of Pledged Shares In Escrow. The Pledgor will cause
the Pledged Shares to be delivered to the Agent for deposit in escrow with the
Agent upon execution of this Agreement.

         Section 6.2 Duties of the Agent.

             (a) The Agent will hold the Collateral in escrow and:

                  (i) will deliver such Collateral to the Pledgor when it has
received joint written instructions from the Pledgor and Payee requesting such
delivery; or

                                      -9-


                  (ii) Subject to the provisions of paragraphs (e) and (f) of
this Section 6.2, will deliver the Collateral to the Payee ten (10) business
days after the occurrence of a Default and receipt of notice from the Payee,
which notice the Payee agrees to simultaneously send to the Pledgor, stating
that a Default has occurred; or

                  (iii) will deliver the Collateral to the Payee ten (10)
business days after satisfaction of all Secured Obligations and receipt of
notice from the Pledgor, which notice the Pledgor agrees to simultaneously send
to the Payee, stating that such Secured Obligations have been satisfied.

             (b) The obligations of the Agent are limited to those specifically
provided in this Agreement and no other, and the Agent shall have no liability
under, and no duty to inquire into the terms and provisions of, any agreement
between the parties hereto. The Agent is acting hereunder as an accommodation to
the parties hereto. The duties of the Agent are purely ministerial in nature,
and it shall not incur any liability whatsoever, except for its willful
misconduct or gross negligence. The Agent may consult with counsel of its choice
(which may be a member of its own firm), and shall not be liable for following
the advice of such counsel. The Agent may act on the advice of counsel but will
not be responsible for acting or failing to act on the advice of counsel.

             (c) The Payee and the Pledgor jointly and severally covenant and
agree from time to time and at all times hereafter well and truly to save,
defend and hold harmless and fully indemnify the Agent, its successors, and
assigns, from and against all loss, costs, charges, suits, demands, claims,
damages, fees and expenses (including reasonable attorney's fees and expenses
either paid to retained attorneys or amounts representing the fair value of
legal services, based on its customary billing rates, rendered to itself) (all
of the foregoing, "Losses") which the Agent, its successors or assigns may at
any time of times hereafter bear, sustain, suffer or be put unto for or by
reason arising out of or in connection with the performance of its obligations
in accordance with the provisions of this Agreement or anything in any manner
relating thereto or by reason of the Agent's compliance with the terms hereof.
The foregoing indemnities in this Article VI shall survive the resignation or
substitution of the Agent and the termination of this Agreement. The Pledgor and
Payee shall pay any Losses of the Agent as incurred by the Agent.

             (d) In case proceedings should hereafter be taken in any court
respecting any of the Collateral, the Agent will not be obligated to defend any
such action or submit its rights to the court until it has been indemnified by
other good and sufficient security in addition to the indemnity given in Section
6.2(c) against its costs of such proceedings.

             (e) If protest is made to any action, contemplated by the Agent
under this Agreement, the Agent will (without thereby increasing its obligations
hereunder) continue to hold the Collateral until the rights to the Collateral is
legally determined by a court of competent jurisdiction or otherwise.

             (f) If written notice of protest is made by the Payee or the
Pledgor to the Agent to any action contemplated by the Agent in connection with
this Agreement, and such notice sets out reasons for such protest, the Agent
will continue to hold the Collateral until the rights to the Collateral are
legally determined by a court of competent jurisdiction or otherwise.

                                      -10-


             (g) The obligations of the Agent may be terminated at any time by
and upon the receipt by the Agent of ten days' written notice of termination
executed by the Payee and the Pledgor, directing the distribution of all
property then held by the Agent under and pursuant to this Agreement. The Agent
shall have the sole and absolute right to resign in accordance with the
provisions of this Section 6.2(m). The Agent may resign and be discharged from
its duties hereunder at any time by giving at least ten days' prior written
notice of such resignation to the Payee and Pledgor and specifying a date upon
which such resignation shall take effect. Upon receipt of such notice, the Payee
and Pledgor shall jointly appoint a successor agent and such successor agent
shall become the Agent hereunder on the resignation date specified in such
notice. If no successor Agent is appointed prior to the date specified, the
Agent shall have the right at any time to deposit all the Collateral then held
by the Agent with a court of competent jurisdiction, and the Agent shall have no
further obligation with respect thereto. The Payee and Pledgor, acting jointly,
may at any time substitute a new agent by giving ten days' notice thereof to the
Agent then acting and paying all fees and expenses of such Agent. In the
alternative, in the event of a dispute in relation to the release of all or any
portion of the Collateral held by the Agent, the Agent may resign fifteen days
after giving written notice of such resignation to the parties hereto and
depositing such Collateral with an appropriate court, and the Agent shall have
no further obligation with respect hereto or under this Agreement, in any
manner. This Agreement shall automatically terminate as to the Agent if and when
all of the Collateral shall have been distributed by the Agent in accordance
with the terms of this Agreement.

             (h) If any dispute should arise with respect to the ownership or
right of possession of all or any portion of the Collateral, or if the Agent, in
its sole judgment, receives conflicting instructions with respect to any matter
covered by this Agreement or with respect to any distribution of the Collateral,
the Agent is authorized and directed to retain in its possession, without
liability to anyone, all or any portion of the Collateral until such dispute
shall have been settled either by agreement of the parties concerned by filing
of written directions signed by the Payee and Pledgor to the Agent or by a final
decree, but the Agent shall be under no duty whatsoever to institute or defend
any such proceedings. Notwithstanding anything to the contrary contained herein,
in the event of any dispute arising between the Payee and the Pledgor or between
any other persons, including, without limitation, the Agent, with respect to all
or any portion of the Collateral or upon the election of the Agent, in its sole
discretion, the Agent may in its sole discretion deliver and interplead the
Collateral into court, and such delivery and interpleading will be an effective
discharge to the Agent.

             (i) The Agent shall be promptly reimbursed, jointly and severally
by the Payee and Pledgor, for reasonable expenses incurred by the Agent in the
performance of services pursuant to this Agreement including, but not limited
to, legal fees, including all fees and expenses incurred in connection with its
resignation pursuant to this Section 6.2.

             (j) The Payee and Pledgor shall jointly and severally reimburse the
Agent for any costs incurred by the Agent in connection with any dispute arising
under this Agreement. The Payee and Pledgor shall jointly and severally
reimburse the Agent for any costs incurred in the performance of its duties
hereunder.

         Section 6.3 Waiver of Conflicts. The Pledgor hereby acknowledges that
Pepper Hamilton LLP has represented and been legal counsel to the Payee and its
Affiliates previously

                                      -11-


and in connection with the negotiation and execution of this Agreement, the
Purchase Agreement and the consummation of the transactions contemplated hereby
and thereby. Each of the Pledgor and the Payee further acknowledge that it has
requested that Pepper Hamilton LLP be the Agent for purposes of this Agreement.
EACH OF PLEDGOR AND PAYEE HEREBY WAIVES ANY AND ALL CONFLICTS OF INTEREST OR
OTHERWISE WHICH MAY EXIST OR OTHERWISE BE ASSERTED WITH RESPECT TO OR IN
CONNECTION WITH PEPPER HAMILTON LLP'S ROLE AS AGENT UNDER THIS AGREEMENT AND ITS
PAST, PRESENT OR FUTURE REPRESENTATION OF THE PAYEE OR ANY OF ITS AFFILIATES.
FURTHER, THE PLEDGOR HEREBY WAIVES ANY AND ALL CLAIMS, RIGHTS AND DEFENSES
AGAINST OR WITH RESPECT TO PEPPER HAMILTON LLP AS AGENT UNDER THIS AGREEMENT OR
AS COUNSEL TO THE PAYEE OR ITS AFFILIATES WHICH IT MAY HAVE OR OTHERWISE ASSERT.
PLEDGOR HEREBY SPECIFICALLY AGREES AND ACKNOWLEDGES THAT PEPPER HAMILTON LLP MAY
ACT AS COUNSEL TO THE PAYEE OR ITS AFFILIATES IN CONNECTION WITH ANY CLAIM,
PROCEEDING OR LITIGATION ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT,
THE PURCHASE AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR
THEREIN.

                                   ARTICLE 7
                                 MISCELLANEOUS

         Section 7.1 Notices. All notices, requests and other communications to
any party hereunder shall be in writing and mailed, faxed or delivered, to the
address or facsimile number set forth below or to such other address or
facsimile number as such party may hereafter specify for the purpose by notice
to the other. All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine (subject to confirmation immediately by telephone call to the recipient
and followed promptly by delivery of a hard copy original thereof),
respectively, or if mailed, be effective upon the second Business Day after the
date deposited into the U.S. mail, or if delivered, be effective upon delivery.
Rejection or refusal to accept, or the inability to deliver because of a changed
address of which no notice was given shall not affect the validity of notice
given in accordance with this Section 7.1.



    If to the Payee:           SSL Americas, Inc.
                               3585 Engineering Drive, Suite 200
                               Norcross, Georgia 30092
                               Attention: Robert Kaiser, Vice President and
                               General Counsel
                               Facsimile: (770) 582-2226

    With a copy to:            Pepper Hamilton LLP
                               400 Berwyn Park
                               899 Cassatt Road
                               Berwyn, Pennsylvania 19312-1183
                               Attention: James D. Rosener, Esquire


                                      -12-


                               Facsimile: 610-640-5480

    If to the Pledgor          Langer, Inc.
                               450 Commack Road
                               Deer Park, New York 11729
                               Attention: Chief Executive Officer
                               Facsimile: (631) 667-1203

    With a copy to:            Kane Kessler, P.C.
                               1350 Avenue of the Americas
                               New York, New York 10019
                               Attention: Robert L. Lawrence, Esq.
                               Facsimile: (212) 245-3009

    If to the Agent:           Pepper Hamilton LLP
                               400 Berwyn Park
                               899 Cassatt Road
                               Berwyn, Pennsylvania 19312-1183
                               Attention: James D. Rosener, Esquire
                               Facsimile: 610-640-5480


         Section 7.2 Waivers, Non-Exclusive Remedies. No failure on the part of
the Payee to exercise, and no delay in exercising, no course of dealing with
respect to, any right under this Agreement shall operate as a waiver thereof,
nor shall any single or partial exercise by the bank of any right under this
Agreement preclude any other or further exercise thereof or the exercise of any
other right. The rights of the Payee under this Agreement are cumulative and are
not exclusive of any other remedies provided by law.

         Section 7.3 Expenses; Documentary Taxes. Pledgor shall forthwith on
demand pay all out-of-pocket expenses incurred by the Payee, including fees and
disbursements of its counsel and agents, in connection with the preparation and
administration of this Agreement or the administration, sale or other
disposition of the Agreement or the administration, sale or other disposition of
the Collateral or the preservation, protection or defense of the rights of the
Payee in and to the Collateral. Pledgor shall forthwith pay on demand the amount
of any taxes which the Payee may have been required to pay by reason of the
security interests granted in the Collateral (including any applicable transfer
taxes) or to free any of the Collateral from the lien thereof.

         Section 7.4 Successors and Assigns. This Agreement is for the benefit
of the Payee and its successors and assigns, and in the event of an assignment
of all or any of the Secured Obligations, the rights hereunder, to the extent
applicable to the indebtedness so assigned, may be transferred with such
indebtedness. This Agreement shall be binding upon Pledgor and its successors
and assigns.

                                      -13-


         Section 7.5 Amendments and Waivers. Any provision of this Agreement may
be amended or waived, if, but only if, such amendment or waiver is in writing
and is signed by Pledgor and the Payee.

         Section 7.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to the principles of conflict of laws of the State of New York or any
other jurisdiction.

         Section 7.7 Limitation by Law; Severability.

             (a) All rights, remedies and powers provided in this Agreement may
be exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and all the provisions of this Agreement are
intended to be subject to all applicable mandatory provisions of law which may
be controlling and be limited to the extent necessary so that they will not
render this Agreement invalid, unenforceable in whole or in part, or not
entitled to be recorded, registered or filed under the provisions of any
applicable law.

             (b) If any provision hereof is invalid and unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Payee in order to carry out the
intentions of the parties hereto as nearly as may be possible, and (ii) the
invalidity or unenforceability of any provision hereof in any jurisdiction shall
not affect the validity or enforceability of such provision in any other
jurisdiction.

         Section 7.8 Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when the Payee shall have received
counterparts hereof signed by itself and Pledgor. Delivery by telecopy of an
executed counterpart of a signature page to this Agreement or any notice,
communication, agreement, certificate, document or other instrument in
connection with this Agreement, the Note or the Purchase Agreement shall be
effective as delivery of an executed original counterpart thereof.

         Section 7.9 Consent to Jurisdiction. Pledgor consents to the
commencement and maintenance of any action or proceeding against it in any court
within the State of New York or in the United States District Court for the
Eastern District of New York, and Pledgor further consents to service of process
in any such action by the mailing of copies of such process to Pledgor at the
address specified in this Agreement for delivery of notice to Pledgor. Pledgor
agrees that the courts of the State of New York and the United States District
Court for the Eastern District of New York shall have exclusive jurisdiction for
any action or proceeding commenced by or through it with respect to this
Agreement and hereby waives any claim that New York, New York is an inconvenient
forum and that any action or proceeding arising out of or relating to this
Agreement and commenced in any state or federal courts sitting in New York, New
York lacks proper venue

         Section 7.10 Waiver of Jury Trial. PLEDGOR AND THE PAYEE HEREBY
EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OR ANY CLAIM, DEMAND,

                                      -14-


ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT OR THE NOTE; AND
PLEDGOR AND THE PAYEE HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF PLEDGOR AND
THE PAYEE HERETO TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.






      [SIGNATURE PAGE FOLLOWS; REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]




                                      -15-


         IN WITNESS WHEREOF, the parties hereto have caused this Stock Pledge
and Agency Agreement to be duly executed by their respective authorized officers
or partners, as applicable, as of the day and year first above written.


                                   PAYEE
                                   SSL HOLDINGS, INC.


                                   By: /s/ Robert Kaiser

                                   Name: Robert Kaiser

                                   Title: Vice President


                                   PLEDGOR
                                   LANGER, INC.


                                   By: /s/ Andrew H. Meyers
                                       --------------------

                                   Name: Andrew H. Meyers

                                   Title: Chief Executive Officer and President

                                   AGENT
                                   PEPPER HAMILTON LLP


                                   By: /s/ James D. Rosener
                                       --------------------
                                           James D. Rosener, a Partner








              [signature page to Stock Pledge and Agency Agreement]



                                    EXHIBIT A

                                      NOTE
                                      ----

See Exhibit 4.5









                                    EXHIBIT B

                                 PLEDGED SHARES
                                 --------------



- ----------------------------------------------------------------------------------------------------------
         Issuer                  No. and Type of Shares               Date of Transfer     Certificate No
- ----------------------------------------------------------------------------------------------------------

Silipos, Inc.            300 shares of Series A Common Stock         September 30, 2004          A-9
- ----------------------------------------------------------------------------------------------------------
Silipos, Inc.            15 shares of Series B Common Stock          September 30, 2004          B-3
- ----------------------------------------------------------------------------------------------------------

EX-4.5

                             SECURED PROMISSORY NOTE

September 30, 2004                                                    $7,500,000


         LANGER, INC., a Delaware corporation (the "Company"), hereby promises
to pay to the order of SSL Holdings, Inc., a Delaware corporation (the
"Seller"), or its assigns (the Seller and each of its assigns is a "Holder"),
the principal amount of Seven Million Five Hundred Thousand Dollars ($7,500,000)
as may be reduced or increased from time to time pursuant to Section 1 of this
Note (as so reduced or increased from time to time, the "Principal Amount").
This Secured Promissory Note (the "Note") has been issued pursuant to that
certain Stock Purchase Agreement, dated as of September 22, 2004 (the "Purchase
Agreement"), by and among the Company, the Seller, LRC North America, Inc., a
Delaware corporation, and Silipos, Inc., a Delaware corporation. Capitalized
terms used herein which are not defined shall have the respective meanings given
to them in the Purchase Agreement.

         1. Reduction or Increase of the Principal Amount. The Principal Amount
may be reduced or increased, as applicable, in accordance with the terms and
conditions set forth in Section 2.4 of the Purchase Agreement. Upon any
reduction or increase in the Principal Amount, as applicable, the Company shall
execute and deliver a new Note to the Holder and the Holder shall return the old
Note to the Company. The failure of the Company to deliver a new Note to the
Holder at any time as required by this Note shall not affect the Company's
obligations to the Holder to pay the Principal Amount, as applicable, and
accrued and unpaid interest thereon in accordance with the terms of this Note.

         2. Payment of Principal. The Company shall repay the entire Principal
Amount outstanding on or before the earliest of (a) March 31, 2006 (the
"Maturity Date"), (b) a sale or transfer (in one or more transactions or series
of transactions) of (i) all or substantially all of the assets of Silipos, Inc.
("Silipos") to an entity that is not a direct or indirect subsidiary of the
Company or Silipos, (ii) all or substantially all of the assets of the Company
or any of its respective successors or assigns, (iii) a majority of the
then-issued and outstanding capital stock of Silipos to an entity that is not a
direct or indirect subsidiary of the Company or Silipos, (iv) a majority of the
then-issued and outstanding capital stock of the Company or any of its
successors or assigns to an entity that is not a direct or indirect subsidiary
of the Company, or (c) a merger, consolidation, share exchange or any other
business combination between any of the Company, Silipos, or any of their
respective successors or assigns and any non-affiliated entity, whereby the
holders of a majority of the voting stock or other voting equity of such entity
prior to such transaction do not hold a majority of the voting stock or other
voting equity of the surviving or resulting entity in the transaction
immediately after consummation thereof; provided, however, the Maturity Date
shall be accelerated to be March 31, 2005 in the event that (x) the Principal
Amount and all accrued and unpaid Interest thereon has not been paid to the
Holder on or prior to March 31, 2005, and (y) either (i) the Protection Notice
shall not have been delivered in writing to the Holder on or prior to March 15,
2005, or (ii) the Protection Payment shall not have been made by the Company
pursuant to Section 6.



         3. Payment of Interest. Interest shall be payable semi-annually in
arrears on the last day of February and August in each year until the Maturity
Date; provided, however, the first interest payment on this Note shall not be
due and payable until February 1, 2005. At the Maturity Date, all unpaid
principal and interest shall be due and payable to the Holder in cash. Interest
shall accrue until March 31, 2005, at the rate of five and one-half percent
(5.5%) per annum (based on a 360 day year comprised of twelve 30 day months) on
the unpaid Principal Amount outstanding. From April 1, 2005 until March 31,
2006, interest shall accrue at the rate of seven and one-half percent (7.5%) per
annum on the unpaid Principal Amount outstanding (based on a 360 day year
comprised of twelve 30 day months).

         4. Time of Payment. If any payment of principal or interest on this
Note shall become due on a Saturday, Sunday, or legal holiday under the laws of
the State of New York, such payment shall be made on the next succeeding day
that is not a Saturday, Sunday or such legal holiday (a "Business Day") and such
extension of time shall in such case be included in computing interest in
connection with such payment.

         5. Prepayment. The Company shall have the right to prepay the Note, in
whole or in part, at any time or from time to time, without premium or penalty,
but with interest accrued and unpaid to the date of such prepayment.

         6. Protection Payment. To the extent that all of the Principal Amount
and the accrued and unpaid Interest thereon shall not have been paid in full to
the Holder on or prior to March 31, 2005, the Company shall (a) have provided
written notice (the "Protection Notice") to the Holder on or prior to March 15,
2005 of the Company's election to either, (i) increase the Principal Amount by
$1,000,000, effective April 1, 2005, or (ii) pay Holder an amount in cash equal
to $500,000 on or prior to March 31, 2005, which amount shall not be deemed to
be a repayment of any portion of the Principal Amount or Interest under this
Note, (such $1,000,000 increase in the Principal Amount or, in the alternative,
$500,000 payment in cash, the "Protection Payment"), and (b) make such
Protection Payment, either by increase in the Principal Amount by $1,000,000 or,
in the alternative, $500,000 payment in cash, pursuant to the terms of this
Section 6.

         7. Security. As collateral security for the payment of this Note and of
any and all other obligations and liabilities of the Company to the Seller, the
Holder shall execute and deliver to the Seller the Pledge Agreement (the "Pledge
Agreement"), dated as of the date hereof, executed and delivered by the Company
in favor of the Seller.

         8. Events of Default.

                  (a) Definition. For purposes of this Note, an "Event of
Default" shall be deemed to have occurred if:

                           (i) the Company shall default in the payment of any
amount due under this Note, or otherwise in respect of any Senior Indebtedness,
on the date when due, whether at maturity or other time, by acceleration or
otherwise and such default shall continue for five (5) calendar days thereafter.
"Senior Indebtedness" shall mean (i) that certain purchase money financing in
the principal amount of Five Million Five Hundred Thousand Dollars



($5,500,000) referred to in Section 6.1(h) of the Purchase Agreement or any
replacement up to the original amount thereof, less any repayment thereof, (ii)
working capital financing from a bank with a principal amount equal to or less
than Three Million Five Hundred Thousand Dollars ($3,500,000), any replacement
up to the original amount thereof, less any repayment thereof, and (iii) any
indebtedness incurred to finance the acquisition of Poly-Gel in connection with
the exercise of the Put Option, as defined in the Purchase Agreement;

                           (ii) default shall be made in the due observance or
performance of any other covenant, condition or agreement on the part of the
Company to be observed or performed pursuant to the terms of this Note and such
default shall continue for ten (10) days after written notice thereof,
specifying such default and requesting that the same be remedied, shall have
been given to the Company by the Holder;

                           (iii) an Insolvency Event occurs. "Insolvency Event"
means any dissolution, winding up, liquidation, composition or similar relief
with respect to all or substantially all of the Company's debts, whether
voluntary or involuntary or in bankruptcy, receivership, or similar proceedings
or upon an assignment for the benefit of creditors or any other marshalling of
the assets and liabilities of the Company, and in the case of an involuntary
proceeding, it is not dismissed within sixty (60) days; or

                           (iv) The Company shall violate the Tangible Net Worth
Covenant or the Incurrence Covenant.

                  (b) Consequences of Events of Default.

                           (i) If an Event of Default of the type other than
that described in clause (iii) of subparagraph 8(a) has occurred and is
continuing, the Holder may declare all or any portion of the outstanding
Principal Amount due and payable and demand immediate payment of all or any
portion of the outstanding Principal Amount. If the Holder demands immediate
payment of all or any portion of the Note, the Company shall immediately pay to
such Holder the Principal Amount requested to be paid together with all accrued
and unpaid interest thereon.

                           (ii) If an Insolvency Event occurs, all of the
outstanding Principal Amount shall automatically be immediately due and payable
without any notice or other action on the part of the Holder.

                           (iii) If an Event of Default has occurred, each
Holder shall also have any other rights or remedies which such Person may have
pursuant to applicable law or equity.

                           (iv) Upon an Event of Default, the Interest Rate
shall accrue at a rate of twelve percent (12%) and shall increase by three
percent (3%) every ninety (90) days thereafter until it reaches the maximum
amount permitted by applicable law.

         9. Subordination.



                  (a) This Note and the indebtedness evidenced hereby are
subordinate in all respects to the prior payment in full of those amounts in
respect of the Senior Indebtedness.

                  (b) Within ten (10) business days after a default or event of
default with respect to the Senior Indebtedness, the Company shall furnish a
written notice thereof, including a copy of any written notice received by the
Company from the holder of such Senior Indebtedness, to the Holder in the manner
and at the address specified pursuant to Section 11 hereof. From and after the
time that the Company receives such notice from the holder of the Senior
Indebtedness, the Company's obligation to make payment on account of principal
or interest on the Note is subject to subsection 8(c).

                  (c) If there shall have occurred an event of default with
respect to the Senior Indebtedness, or in the instrument or instruments under
which the Senior Indebtedness has been issued, permitting the holders thereof,
after notice or lapse of time, or both, to accelerate the maturity thereof, then
no payment on account of principal or interest on the Note shall be made, nor
shall any assets be applied to the conversion, redemption or other acquisition
or retirement of the Note until the earliest to occur of (i) 60 days after the
date of such default, or (ii) the date on which the Senior Indebtedness to which
such event of default related is discharged or accelerated, or (iii) the date
such event of default is waived by the holders of such Senior Indebtedness or
otherwise cured, or (iv) the filing of any voluntary or involuntary petition in
bankruptcy by or against the Company. Within three (3) business days after
resolution of such default or event of default in accordance with the
immediately preceding sentence, the Company shall furnish written notice thereof
to the Holder, in the manner and at the address specified pursuant to Section 11
hereof.

         10. Covenants.

                  (a) Tangible Net Worth Covenant. On each October 1, January 1,
April 1 and July 1 (each, a "Test Date") during the period beginning on the date
hereof and ending on the date on which the entire Principal Amount and all
accrued interest thereon shall have been paid in full to the Holder (the
"Covenant Period"), the Tangible Net Worth of the Company shall not be less than
$4,500,000 (the "Tangible Net Worth Covenant"). For purposes of this Note,
"Tangible Net Worth" shall mean the net book value (after deducting related
depreciation, obsolescence, amortization, valuation and other proper reserves)
at which the consolidated assets of Silipos would be shown on a consolidated
balance sheet at such time, minus the sum of (a) all items properly classified
as intangibles in accordance with GAAP (b) investments in subsidiaries
(including Silipos UK, Ltd.); and (c) the amount at which Silipos' liabilities
(other than capital stock and surplus) would be shown on such balance sheet.
Within 15 Business Days after each such Test Date, Silipos shall provide a
written report to the Holder of the Tangible Net Worth of Silipos and Silipos
UK, Ltd. as of the most recent Test Date with supporting documentation which
provides reasonable detail to allow the Holder to confirm the calculation of
such Tangible Net Worth as of the most recent Test Date.

                  (b) Incurrence Covenant. During the Covenant Period, the
Company or its subsidiaries shall not incur indebtedness for borrowed money to
any party; provided, however, the Company may incur the Senior Indebtedness,
indebtedness for financing solely for the payment of the Put Option (as such
term is defined in the Purchase Agreement) and may also



enter into equipment or capital lease transactions which do not exceed $500,000
in the aggregate (the "Incurrence Covenant").

         11. Amendment and Waiver. This Note may be amended and the Company may
take any action herein prohibited, or omit to perform any act herein required to
be performed by it, only if the Company has obtained the prior written consent
of the Holder.

         12. Loss, Theft, Destruction or Mutilation of Note. Upon receipt of
evidence of the loss, theft, destruction or mutilation of this Note, and, in the
case of any such loss, theft or destruction, upon receipt of an affidavit of
loss from the Holder in form reasonably satisfactory to the Company, the Company
will make and deliver, in lieu of this Note, a new Note of like tenor.

         13. Place of Payment; Notices. Payments of principal and any notice or
report are to be delivered to the Holder at the following address: 3585
Engineering Drive #200, Norcross, GA 30092-9214, Attn: Accounting Department or
to such other address as specified in a written notice delivered to the Company
by Holder. Notices sent by the Company shall be deemed received when delivered
personally or one (1) Business Day after being sent by Federal Express or other
nationally recognized overnight carrier or three (3) Business Days after being
sent by certified or registered mail to the following address:

                           Langer, Inc.
                           450 Commack Road
                           Deer Park, New York 11729
                           Attention: Chief Executive Officer
                           Facsimile: (631) 667-1203

                           with a copy to:

                           Kane Kessler, P.C.
                           1350 Avenue of the Americas
                           New York, New York 10019
                           Attention: Robert L. Lawrence, Esq.
                           Facsimile: (212) 245 3009


         14. Jurisdiction. This Note shall be subject to the exclusive
jurisdiction of the courts of New York County, New York. Any Event of Default
hereunder shall be deemed to be a default occurring in the State of New York by
virtue of a failure to perform an act required to be performed in the State of
New York, and the Company and the Holder, for themselves and their successors,
irrevocably and expressly agree to submit to the exclusive jurisdiction of the
courts of the State of New York for the purpose of enforcing the terms of this
Note or the transactions contemplated hereby. The Company and the Holder
irrevocably waive (for themselves and their successors), to the fullest extent
permitted by law, any objection which they may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Note or any judgment entered by any court located in New York County, New
York, and



further irrevocably waive any claim that any suit, action or proceeding brought
in New York County, New York has been brought in an inconvenient forum.

         15. Assignment. This Note may be assigned by the Company to any
wholly-owned subsidiary of the Company; provided, however, that the Company
shall (i) provide written notice of such assignment to the Holder within five
(5) days of such assignment, (ii) provide a written assumption signed by the
assignee of this Note agreeing to be bound by the provisions of this Note, and
(iii) remain jointly and severally liable with any such assignee for the
obligations, liabilities and provisions of this Note.

         16. Governing Laws. The validity, construction, and interpretation of
this Note shall be governed by the internal laws of the State of New York
without respect to the principles of conflicts of laws of the State of New York
or any other jurisdiction.



      [SIGNATURE PAGE FOLLOWS; REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]










         IN WITNESS WHEREOF, the Company has executed and delivered this Note on
the date first above written.


                               LANGER, INC.



                               By: /s/ Andrew H. Meyers
                                   --------------------
                                   Name:  Andrew H. Meyers
                                   Title: President and Chief Executive Officer

EX-4.6

                                 PROMISSORY NOTE

September 30, 2004                                                    $3,000,000


         LANGER, INC., a Delaware corporation (the "Company"), hereby promises
to pay to the order of SSL Holdings, Inc., a Delaware corporation (the
"Seller"), or its assigns (the Seller and each of its assigns is a "Holder"),
the principal amount of Three Million Dollars ($3,000,000) as may be reduced or
increased from time to time pursuant to Section 1 of this Note (as so reduced or
increased from time to time, the "Principal Amount"). This Promissory Note (the
"Note") has been issued pursuant to that certain Stock Purchase Agreement, dated
as of September 22, 2004 (the "Purchase Agreement"), by and among the Company,
the Seller, LRC North America, Inc., a Delaware corporation, and Silipos, Inc.,
a Delaware corporation. Capitalized terms used herein which are not defined
shall have the respective meanings given to them in the Purchase Agreement.

         1. Reduction or Increase of the Principal Amount.

                  (a) The Principal Amount may be reduced or increased, as
applicable, in accordance with the terms and conditions set forth in Section
8.4(f) of the Purchase Agreement. Upon any reduction or increase in the
Principal Amount, as applicable, the Company shall execute and deliver a new
Note to the Holder and the Holder shall return the old Note to the Company. The
failure of the Company to deliver a new Note to the Holder at any time as
required by this Note shall not affect the Company's obligations to the Holder
to pay the Principal Amount, as applicable, and accrued and unpaid interest
thereon in accordance with the terms of this Note.

                  (b) The Principal Amount shall be reduced by an amount equal
to fifty percent (50%) of the amount of the Protection Payment (as such term is
defined in the $7.5 Million Note) actually paid by the Company pursuant to
Section 6 of the $7.5 Million Note (as such term is defined in herein) if and
only if (i) the Principal Amount and all accrued and unpaid interest thereon is
paid to the Holder on or prior to March 31, 2006, (ii) the Principal Amount of
the $7.5 Million Note and all accrued and unpaid interest thereon has been
previously paid or is simultaneously paid to the Holder (whether or not there
was an Event of Default (as such term is defined in the $7.5 Million Note) under
the $7.5 Million Note prior to the repayment thereof), and (iii) the Maturity
Date of the $7.5 Million Note has been extended to March 31, 2006 pursuant to
the terms of Section 2 of the $7.5 Million Note. Payment of the Principal Amount
shall be subject to a right of setoff pursuant to Sections 5.19 and 5.20 of the
Purchase Agreement.

         2. Payment of Principal. The Company shall repay the entire Principal
Amount outstanding on or before the earliest of (a) December 31, 2009 (the
"Maturity Date"), (b) a sale or transfer (in one or more transactions or series
of transactions) of (i) all or substantially all of the assets of Silipos, Inc.
("Silipos") to an entity that is not a direct or indirect subsidiary of the
Company or Silipos, (ii) all or substantially all of the assets of the Company
or any of its respective successors or assigns, (iii) a majority of the
then-issued and outstanding



capital stock of Silipos to an entity that is not a direct or indirect
subsidiary of the Company or Silipos, (iv) a majority of the then-issued and
outstanding capital stock of the Company or any of its successors or assigns to
an entity that is not a direct or indirect subsidiary of the Company, or (c) a
merger, consolidation, share exchange or any other business combination between
any of the Company, Silipos, or any of their respective successors or assigns
and any non-affiliated entity, whereby the holders of a majority of the voting
stock or other voting equity of such entity prior to such transaction do not
hold a majority of the voting stock or other voting equity of the surviving or
resulting entity in the transaction immediately after consummation thereof.

         3. Payment of Interest. Interest shall be payable semi-annually in
arrears on the last day of February and August in each year until the Maturity
Date; provided, however, the first interest payment on this Note shall not be
due and payable until February 1, 2005.

At the Maturity Date, all unpaid principal and interest shall be due and payable
to the Holder in cash. Interest shall accrue at the rate of five and one-half
percent (5.5%) per annum (based on a 360 day year comprised of twelve 30 day
months) on the unpaid Principal Amount outstanding. Upon the occurrence and
during the continuation of an Event of Default (as defined herein), interest
shall accrue at the rate of eleven percent (11%) per annum (based on a 360 day
year comprised of twelve 30 day months) on the unpaid Principal Amount
outstanding and thereafter shall increase by three percent (3%) every ninety
(90) days until it reaches the maximum amount permitted by applicable law.

         4. Time of Payment. If any payment of principal or interest on this
Note shall become due on a Saturday, Sunday, or legal holiday under the laws of
the State of New York, such payment shall be made on the next succeeding day
that is not a Saturday, Sunday or such legal holiday (a "Business Day") and such
extension of time shall in such case be included in computing interest in
connection with such payment.

         5. Prepayment. The Company shall have the right to prepay the Note, in
whole or in part, at any time or from time to time, without premium or penalty,
but with interest accrued and unpaid to the date of such prepayment.

         6. Events of Default.

                  (a) Definition. For purposes of this Note, an "Event of
Default" shall be deemed to have occurred if:

                           (i) the Company shall default in the payment of any
amount due under this Note on the date when due, whether at maturity or other
time, by acceleration or otherwise and such default shall continue for five (5)
calendar days thereafter;

                           (ii) default shall be made in the due observance or
performance of any other covenant, condition or agreement on the part of the
Company to be observed or performed pursuant to the terms of (a) this Note, or
(b) the Secured Promissory Note in the principal amount of $7,500,000 due and
payable March 31, 2005, made by the Company in favor of the Seller (the "$7.5
Million Note"), and such default shall continue for ten (10) days after written
notice thereof, specifying such default and requesting that the same be
remedied, shall have been given to the Company by the Holder;



                           (iii) an Insolvency Event occurs. "Insolvency Event"
means any dissolution, winding up, liquidation, composition or similar relief
with respect to all or substantially all of the Company's debts, whether
voluntary or involuntary or in bankruptcy, receivership, or similar proceedings
or upon an assignment for the benefit of creditors or any other marshalling of
the assets and liabilities of the Company, and in the case of an involuntary
proceeding, it is not dismissed within sixty (60) days; or

                           (iv) The Company shall violate the Tangible Net Worth
Covenant or the Incurrence Covenant.

                  (b) Consequences of Events of Default. Without limiting the
other terms and conditions set forth in the Note,

                           (i) If an Event of Default of the type other than
that described in clause (iii) of subparagraph 6(a) has occurred and is
continuing, the Holder may declare all or any portion of the outstanding
Principal Amount due and payable and demand immediate payment of all or any
portion of the outstanding Principal Amount. If the Holder demands immediate
payment of all or any portion of the Note, the Company shall immediately pay to
such Holder the Principal Amount requested to be paid together with all accrued
and unpaid interest thereon.

                           (ii) If an Insolvency Event occurs, all of the
outstanding Principal Amount shall automatically be immediately due and payable
without any notice or other action on the part of the Holder.

                           (iii) If an Event of Default has occurred, each
Holder shall also have any other rights or remedies which such Person may have
pursuant to applicable law or equity.

         7. Subordination.

                  (a) This Note and the indebtedness evidenced hereby are
subordinate only to the prior payment of those amounts due under (i) that
certain purchase money financing in the principal amount of Five Million Five
Hundred Thousand Dollars ($5,500,000) referred to in Section 6.1(h) of the
Purchase Agreement or any replacement up to the original amount thereof, less
any repayment thereof; (ii) the $7.5 Million Note, (iii) any facility entered
into by the Company that is intended to payoff the $7.5 Million Note and/or
intended to provide working capital to the Company, (iv) working capital
financing from a bank with a principal amount equal to or less than $3,500,000,
any replacement up to the original amount thereof, less any repayment thereof,
and (v) any indebtedness incurred to finance the acquisition of Poly-Gel in
connection with the exercise of the Put Option, as defined in the Purchase
Agreement. (collectively, the "Senior Debt").

                  (b) Within ten (10) business days after a default or event of
default with respect to the Senior Debt, the Company shall furnish a written
notice thereof, including a copy of any written notice received by the Company
from the holder of such Senior Debt, to the Holder in the manner and at the
address specified pursuant to Section 10 hereof. From and after the time that
the Company receives such notice from the holder of the Senior Debt, the



Company's obligation to make payment on account of principal or interest on the
Note is subject to subsection 7(c).

                  (c) If there shall have occurred an event of default with
respect to the Senior Debt, or in the instrument or instruments under which the
Senior Debt has been issued, permitting the holders thereof, after notice or
lapse of time, or both, to accelerate the maturity thereof, then no payment on
account of principal or interest on the Note shall be made, nor shall any assets
be applied to the conversion, redemption or other acquisition or retirement of
the Note until the earliest to occur of (i) 60 days after the date of such
default, or (ii) the date on which the Senior Note to which such event of
default related is discharged or accelerated, or (iii) the date such event of
default is waived by the holders of such Senior Debt or otherwise cured, or (iv)
the filling of any voluntary or involuntary petition in bankruptcy by or against
the Company. Within three (3) business days after resolution of such default or
event of default in accordance with the immediately preceding sentence, the
Company shall furnish written notice thereof to the Holder, in the manner and at
the address specified pursuant to Section 10 hereof.

         8. Amendment and Waiver. This Note may be amended and the Company may
take any action herein prohibited, or omit to perform any act herein required to
be performed by it, only if the Company has obtained the prior written consent
of the Holder.

         9. Loss, Theft, Destruction or Mutilation of Note. Upon receipt of
evidence of the loss, theft, destruction or mutilation of this Note, and, in the
case of any such loss, theft or destruction, upon receipt of an affidavit of
loss from the Holder in form reasonably satisfactory to the Company, the Company
will make and deliver, in lieu of this Note, a new Note of like tenor.

         10. Place of Payment; Notices. Payments of principal and any notice
hereunder are to be delivered to the Holder at the following address: 3585
Engineering Drive #200, Norcross, GA 30092-9214, Attn: Accounting Department or
to such other address as specified in a written notice delivered to the Company
by Holder. Notices sent by the Company shall be deemed received when delivered
personally or one (1) Business Day after being sent by Federal Express or other
nationally recognized overnight carrier or three (3) Business Days after being
sent by certified or registered mail to the following address:

                           Langer, Inc.
                           450 Commack Road
                           Deer Park, New York 11729
                           Attention: Chief Executive Officer
                           Facsimile: (631) 667-1203

                           with a copy to:

                           Kane Kessler, P.C.
                           1350 Avenue of the Americas
                           New York, New York 10019
                           Attention: Robert L. Lawrence, Esq.
                           Facsimile: (212) 245 3009



         11. Jurisdiction. This Note shall be subject to the exclusive
jurisdiction of the courts of New York County, New York. Any Event of Default
hereunder shall be deemed to be a default occurring in the State of New York by
virtue of a failure to perform an act required to be performed in the State of
New York, and the Company and the Holder, for themselves and their successors,
irrevocably and expressly agree to submit to the exclusive jurisdiction of the
courts of the State of New York for the purpose of enforcing the terms of this
Note or the transactions contemplated hereby. The Company and the Holder
irrevocably waive (for themselves and their successors), to the fullest extent
permitted by law, any objection which they may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Note or any judgment entered by any court located in New York County, New
York, and further irrevocably waive any claim that any suit, action or
proceeding brought in New York County, New York has been brought in an
inconvenient forum.

         12. Assignment. This Note may be assigned by the Company to any
wholly-owned subsidiary of the Company; provided, however, that the Company
shall (i) provide written notice of such assignment to the Holder within five
(5) days of such assignment, (ii) provide a written assumption signed by the
assignee of this Note agreeing to be bound by the provisions of this Note, and
(iii) remain jointly and severally liable with any such assignee for the
obligations, liabilities and provisions of this Note.

         13. Governing Laws. The validity, construction, and interpretation of
this Note shall be governed by the internal laws of the State of New York
without respect to the principles of conflicts of laws of the State of New York
or any other jurisdiction.



      [SIGNATURE PAGE FOLLOWS; REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]







         IN WITNESS WHEREOF, the Company has executed and delivered this Note on
the date first above written.


                                LANGER, INC.



                                By: /s/ Andrew H. Meyers
                                    --------------------
                                    Name:  Andrew H. Meyers
                                    Title: President and Chief Executive Officer

EX-99.1

FOR IMMEDIATE RELEASE

CONTACT
Andrew Meyers
President and CEO
Langer, Inc.
(631) 667-1200
ameyers@langerinc.com



               LANGER, INC. COMPLETES ACQUISITION OF SILIPOS, INC.

  - Accretive Transaction Significantly Increases Size of Langer and Scope of
                               Product Offerings

      - Appoints Acting Chief Operating Officer in Connection with Closing


DEER PARK, NY-- October 1, 2004 -- Langer Inc. (NasdaqSC: GAIT) is pleased to
announce the completion of its acquisition of Silipos, Inc. from SSL
International plc ("SSL"). Silipos is a leading manufacturer of gel-based
products focused on the orthopedic, prosthetic and skincare markets, and
operates out of a 40,000 square-foot manufacturing facility in Niagara Falls, NY
as well as a sales and marketing office in New York City.

The acquisition has an aggregate transaction value of $15.5 million, including
$5.0 million of cash paid at closing, a $7.5 million promissory note due on or
before March 31, 2006 and a second $3.0 million promissory note due on or before
December 31, 2009. Up to $2.5 million of additional payments may be made to SSL
in the future under certain circumstances.

"The completion of this acquisition represents a significant step in the
development of our company," said Langer President and CEO Andrew H. Meyers. "In
February 2001, when the current Langer management group invested in Langer, the
Company was generating approximately $11 million in annual revenues. Through the
integration of previous acquisitions, organic growth, and now with the Silipos
acquisition, Langer's pro forma annual revenues will approximate $44 million. In
addition, we expect that this acquisition will improve our consolidated gross
profit margin by approximately 7 percentage points and increase our operating
cash flow. We believe this added scale and profitability will substantially
improve our ability to execute our stated strategy of growth both organically as
well as through targeted acquisitions."

Mr. Meyers continued: "We believe this combination will improve the strategic
positioning of both Langer and Silipos in their core markets. We anticipate that
the two businesses will be able to leverage their customer relationships to
drive organic growth through an expanded range of products, enhanced research
and development capabilities that take advantage of Silipos' patent protected
technologies, and the exploitation of Langer and Silipos management's expertise
across each of our business lines. As such, we believe the combination of Langer
and Silipos will broaden our ability to compete in our identified markets and
augment our ability to serve customers with leading orthopedic and prosthetic
products. In addition, Silipos' skincare business provides the company with an
entry into the multi-billion dollar cosmeceutical market, rounding out our
strategy focused on the orthopedic, which includes orthotic and prosthetic
products, and skincare markets. In terms of geographical focus, this combination
has the added benefit of significant overlap in the North American market, while
at the same time providing increased scale and product breadth in our UK
operations. Langer and Silipos each have a strong presence in the UK and we
expect this combination will yield dividends as the teams work together to
better serve their customers."



Mr Meyers added: "Lastly, on a personal note, we would like to welcome all of
the Silipos associates to our Company. Silipos has a solid base of dedicated
employees as well as a strong management team that brings significant experience
to bear on their business. We look forward to working with them as partners to
grow the combined company."

In connection with the closing, Langer is also pleased to announce the
appointment of W. Gray Hudkins as Acting Chief Operating Officer. Prior to
joining Langer, Mr. Hudkins served as Director of Corporate Development for
Clarus Corporation and Net Perceptions, Inc., and as a Principal for Kanders &
Company. In his role at Kanders & Company, Mr. Hudkins advised Langer on the
purchase of Silipos, and brings experience in operations and corporate
development to his position. Commenting on the appointment, Mr. Meyers stated,
"Gray has served an important role for Langer by spearheading the Silipos
acquisition process. He brings experience in a number of different disciplines
that will strengthen our management team. We are delighted to welcome him
aboard."

Langer, Inc., based in Deer Park, Long Island, New York, with additional
fabricating facilities in Brea, California, Montreal, Canada and Stoke-On-Trent,
UK, and a sales office in Toronto, Canada, is a leading provider of high quality
orthotics and gait-related products sold to practitioners treating
musculo-skeletal disorders.


Statements in this press release may be "forward-looking statements." These
statements can be identified by the use of forward-looking terminology such as
"believes," "expects," "plans," "intends," "estimates," "projects," "could,"
"may," "will," "should", or "anticipates" or the negative thereof, other
variations thereon or comparable terminology, or by discussions of strategy. No
assurance can be given that future results covered by the forward-looking
statements will be achieved. Such forward-looking statements include, but are
not limited to, those relating to the Langer's financial and operating
prospects, future opportunities, Langer's ability to acquire suitable companies
and to successfully integrate acquired companies and assets, outlook of
customers, and reception of new products, technologies, and pricing. In
addition, such forward looking statements involve known and unknown risks,
uncertainties, and other factors including those described from time to time in
the Langer's Registration Statement on Form S-3, most recent Form 10-K and
10-Q's and other Langer filings with the Securities and Exchange Commission
which may cause the actual results, performance or achievements of Langer to be
materially different from any future results expressed or implied by such
forward-looking statements. Also, Langer's business could be materially
adversely affected and the trading price of the Langer's common stock could
decline if any such risks and uncertainties develop into actual events. Langer
undertakes no obligation to make any revisions to the forward-looking statements
contained in this release or to update them to reflect events or circumstances
occurring after the date of this release.